Trading prospects for European channel players are favourable this year, despite collapsing margins on basic IT products.
This is the conclusion of a new IDC study, 'Overview of IT Distribution Channels in Western Europe', which predicts that reseller business in most major European countries is set for a mini-boom.
This is being fuelled in part by leading suppliers such as IBM, Digital and Hewlett-Packard pushing more PC-related business through the channel. They are also working to beef up their channel partners to handle distribution of higher end, added value workstations.
In terms of margins, the UK tops the wholesale league table - with the only double digit margins on offer at 11 per cent - and comes second in the corporate reseller space on 14 per cent, but fares less well in other areas. It lies fourth in the table of margins for Vars, fifth among the network distributors and in the systems integrators' rankings it lies in seventh place - second to last - on 46 per cent.
The best country to operate in as a systems integrator is Germany, where a 63 per cent gross margin can be expected, says IDC, while Spain offers the lowest margin, but that still totals 45 per cent. Network distributors are also well placed in Germany with an expected margin of 28 per cent, well above the 12 per cent on offer in Italy.
Germany is also the best place to be for Vars, which should return 45 per cent margins, unlike their counterparts in Scandanavia, which have to make do with 31 per cent. But corporate resellers should head to Spain for a 15 per cent profit margin, considerably better than Italy's five per cent.
IDC predicts that there wil be a harsher trading evironment for volume products and further market polarisation as the year goes on. The main barrier to channel development will come from the difficulty of financing growth without losing managerial autonomy.
It also identifies three priorities for channel players: winning a share of the services market to compensate for falling commodity product margins; the provision of greater support to partners handling technically advanced product lines; and the development of stronger 'pull' strategies to help second tier partner companies service the smaller companies throughout Europe.
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