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State of play: Concern colours slow start

Brian Karlovsky | March 25, 2014
It isn't easy out there. Over the past quarter, some resellers have hit the wall and consolidation is rife at all levels of the channel, according to key industry players who also expect to see more big deals like the Dicker Data takeover of Express Data and a further squeezing of margins, the latter contributing to some poor results for some tier-one resellers.

It isn't easy out there. Over the past quarter, some resellers have hit the wall and consolidation is rife at all levels of the channel, according to key industry players who also expect to see more big deals like the Dicker Data takeover of Express Data and a further squeezing of margins, the latter contributing to some poor results for some tier-one resellers.

But it's not all doom and gloom despite some experts predicting the "death of the traditional reseller". Business confidence is picking up after an election year, while Cloud, analytics, security, storage, mobility and converged infrastructure in the datacentre are all driving the market to a solid result in March after a modest start to 2014.

But with players like Atlassian packing up and heading for the greener pastures of the UK, many in the channel are still lamenting a lack of government incentives to drive investment in the sector. Channel leaders also are urging the government to get on with the construction of the NBN.

Distribution Central managing director, Nick Verykios, said he was surprised to see so many businesses hitting the wall, despite them being in the right parts of the market. But he was optimistic about the outlook for the next quarter.

"Everyone's predicting that the 'traditional' reseller is dead or dying but I don't see any of them going bust right now," he said. "If you are getting at least modest revenue growth and better profit growth then you are in line with the healthier part of the market right now."

He said the consensus for the channel was that a lot of resellers were calling it a very soft January-February. Much of the slowdown in billed revenue is being attributed to the unseasonably massive October-December quarter.

"The big winners for us have been contemporary threat management solutions, all technologies related to accelerating and optimising applications and data access and movement, solutions stacks based on multi-vendor storage-based reference architectures, video, mobility data analytics," he said.

"Cloud is still threatening to be significant but the reality is it hasn't been overwhelming yet." Verykios predicted the key profit sectors in the next six months would be: Machine and human generated data analysis and security; Application acceleration, availability and security; Data analytics and "storage, storage and storage"; Contemporary threat management solutions; Application/data performance/optimisation; Mobile workforce integration.

Cull marketing speak
But he urged the industry to cull the tidal wave of oversimplified marketing speak. "The political, social and economic environment in Australia has been quite stable and sober," he said. "However, businesses are struggling with what to believe in when it comes to how to solve their contemporary business problems and there is confusion with all the buzz words and crap being thrown around.

 

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