News

IDC Survey: Channel Confidence Sinking

• By Scott Bekker
• February 26, 2009

The finding continues a trend of sinking confidence among channel companies throughout 2008 that basically lines up with the National Bureau of Economic Research's determination that the economy peaked and began its decline in December 2007, said John Grady, research analyst for hardware channels at IDC.

"We focused on the PC segment because it's kind of a concise view of the overall survey," said Grady, adding that all sectors of channel business tracked through the panel saw lower confidence.

The Channel Panel determines confidence by asking participants to rate whether their business is up, flat or down, and by how much, for various sectors. According to the survey, PC resellers said business was decreasing more rapidly in the fourth quarter than in the third quarter. Small PC resellers were hit hardest, but midsized and larger partners began to struggle in Q4, as well.

The survey found Apple resellers in the best position relative to other vendors, but found weakness among the largest Apple partners. Dell and HP were similar overall, with Dell stronger among larger partners and HP stronger among midsized partners.

"In the PC segment even Apple partners, who had reported very strong results for the previous three quarters, were more bearish in Q4," Grady said.

In sectors other than PC resale, Grady said he was surprised at new weakness in channel confidence in the networking and voice sectors in the fourth quarter. "Voice, especially, has been resilient over the last few quarters, with the way IT has been moving toward [unified communications]," Grady said. "The weakness may have been just a one-quarter correction."

IDC has surveyed channel partners on a quarterly basis for its Channel Panel since January 2006, with an average of 578 respondents per quarterly survey.

IDC won't begin surveys for the first quarter of 2009 until next week, but Grady isn't expecting good news. "There's definitely a lack of confidence. There are credit issues and there is unemployment -- the fewer people who are employed, the fewer units you have to buy," he said. "There's nothing to suggest we're going to see a bounce back."

Grady's data shows that larger partners still seem to be in a slightly better position to weather the recession. "Overall, it's going to be the partners who have a broad, differentiated portfolio of offerings that are going to be able to survive this," he says. "Services are going to be key."