Looking back on 2002

The IT industry experienced a challenging 2002. The continued softening of demand for PCs forced resellers and vendors alike to look for innovative ways in which to move products and maintain profitibilityprofitability. While this shift was a continuation of theof the same trend in 2001, it did cement

indications that the industry has reached maturity.

The year began with a solid corporate government season. According to ERC’s PC Segment Reports, first quarter was solid, but not outstanding in terms of growth activity over 2001. Total PC shipments were 994,400 units, which represented a three per cent increased over Q1-2001. Activity in the second quarter slipped, as expected, and finished with 852,900 units. Consumer demand in the third quarter was lackluster, and represented an eight per cent decline over Q3-2001 with 897,700 units. The fourth quarter is proving to be challenging for resellers, retailers and vendors alike.

At the end of first half 2002, ERC surveyed resellers and discovered that hardware sales represented 45 per cent of their revenues. At the same time, there were indicators of a shift towards services and software gaining a bigger chunk of overall revenues. The merged combination of revenue streams points towards a total solution for the client. And this total solution was the way to increase revenues for resellers.

The Canadian market saw evidence of vendors addressing the solutions issue. IBM focused efforts away from a hardware centric platform, in efforts to increase revenue streams. Dell outlined a commitment to supplying a total client solution, as it stepped up its hardware offering, combined with an emphasis on professional services.

The reseller community, however, has a unique opportunity within this merging of products and solutions. By being able to address the needs of specific client verticals, the reseller channel will remain integral to the success of computer vendors throughout 2003. With product offerings from the top vendors, combined with aggressive build-to-order programs and top service levels, resellers are able to provide custom solutions to corporate clients.

The strengths of the reseller are integral to market penetration. Established relationships, client knowledge, aggressive pricing and inventory are all key to the stability and to the growth of the market.

Issues such as product availability, post and pre sales support, price and RMA policy will continue to be key factors in deciding which organization gets the sale among bidders. Resellers will be challenged to provide the best service, at the best price, in the best time period. This will result in a finely tuned collection of market players.

In 2003, resellers and vendors will have to be aggressive and creative in identifying potential sales. Resellers will have to anticipate the needs of clients, and provide the right solution to answer those needs. Most likely, the solution will be one with a hardware, software and services component.

Michelle Warren is a market analyst for Evans Research Corp. of Toronto.

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