The European storage and switch market continues to decelerate, although resellers predict improvement in the second half of the year.
According to the latest Channel Tracker survey, covering sales of enterprise storage and switches products for the three months to the end of March, 66 per cent of European resellers said that sales were either the same or below those for the same quarter in 2002.
The report said that the European market is "decelerating", and warned resellers to expect new competition from networking equipment vendors and Dell.
Nine out of 10 resellers claimed that enterprise storage and switch sales were down on the last quarter, although UK resellers were reporting slightly stronger sales. The report put this down to an "end of fiscal year budget flush".
"Quarterly sales started off fairly strong, but seemed to lose steam through the quarter with disappointing sales in March," said Denise Sangster, president and chief executive at Global Touch, which produced the report.
She added that 55 per cent of European respondents predict lower revenues for the first half of 2003 compared to 2002, but strong sales in the second half of the year.
All resellers indicated that they had to fight against spot deals and service providers selling below cost.
And four out of five European respondents said that price cuts by vendors increased during the quarter, described by the report as an indication of market deceleration.
Graeme Rowe, marketing manager at reseller Positiv, explained that, although his company had a good quarter, customers are delaying purchases until the situation in Iraq is clearer.
"As a company we are doing pretty well but we definitely noticed that events in other parts of the world are making people think more. They aren't cancelling, but they are delaying," he said.
But he added: "It's the market to be in. It's going to be good for the rest of the year but it is slow at the moment."
According to the Channel Tracker report, resellers said that sales of Hitachi, Maxtor, Network Appliance and Snap Appliance were all in line with expectations or ahead for the quarter.
But 52 per cent of respondents said that Brocade sales were below expectations, with 58 per cent saying the same for EMC.
Two thirds indicated that Hewlett Packard (HP) sales were below to extremely below expectations, while 57 per cent of European respondents said that sales of Sun were extremely below expectations.
EMC, HP, Maxtor, Brocade, IBM, Network Appliance and Snap Appliance will all see moderate or moderate-to-strong sales growth through the channel in the second half of the year, according to the report.
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