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Canalys: Partners have the power

The channel has got to a size and a position where it is a serious industry in its own right – and that will have an impact on ecosystem relationships

Channel partners are in the driving seat and have got to a position where vendors need to recognise that the relationship has to be more equal.

The eight largest global resellers, including the likes of Computacenter, have generated revenues of $36bn and have serious financial muscle.

Although the channel is facing economic headwinds because of energy costs, price rises and inflation, the industry has exited the pandemic in a strong position and is keeping that momentum going.

According to Canalys, partners grew at about 18% in the first half of the year and even with challenges mounting, the expectation is that things will only dip slightly, with growth lowering to about 15% in Q3.

“This is a very successful community, in the business industry in the world that has become more independent of the suppliers of hardware and software than ever before,” said Steve Brazier, CEO and president of Canalys. “We are a strong, powerful industry in our own right.

“The tech partner landscape is a significant industry in its own right, with major companies, multibillion-dollar companies, and the balance has shifted a bit because there are thousands, if not tens of thousands, of technology vendors out there trying to find partners.

“The partners can pick and choose and please, in the vendor community when you’re holding your advisory boards or giving your presentations, don’t tell the partners they have to do something because they’re very substantial businesses in their own right.”

Brazier used his keynote at the Canalys EMEA Channels Forum event to share his views on the state of the market, warning that the market was becoming more challenging.

Economic issues in Europe, China and the US were a concern as they overshadowed the rest of Q4 and 2023, but his message was cautiously upbeat, underlining the strength of the channel.

“We are in the best industry in the world,” said Brazier. “We were incredibly fortunate, and we are still incredibly fortunate. So now things are getting a little bit more difficult.”

He said cyber security and public cloud stood out as two areas that were continuing to deliver decent growth.

“Public cloud again last quarter was growing at around 33% combined, and we expected it to drop slightly but still be around 30%,” he said.

Brazier warned that exchange rates and rising energy costs would cause price rises across the hyperscalers and the channel had to prepare customers for that situation.

“The hyperscalers are the world’s most powerful companies – they can source capital, they can try and optimise their energy supplies,” he said. “They have ways of mitigating this. But the change in their business is pretty dramatic...we expect public cloud prices in Europe to increase at least 30% in 2023, causing an almighty shock.”

As well as preparing the channel for that bump in the road, Brazier also highlighted the threat that bitcoin miners pose to customers trying to keep an eye on their cloud costs.

But so many factors are still in flux, he said, adding that China could improve things by relaxing its strict Covid lockdown position, the future of the war in Ukraine was uncertain and the Fed in the US could play a pivotal role in easing the situation.

“We still think the partners this quarter in Europe in Q3 will grow around 15%,” he said. “Maybe Q4 will be harder and the growth will be 12-13%. That’s OK, we are in such a better position than anyone else in the industry.”

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