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Distribution might be able to cushion server price rises

IDC has warned that there will be a fallout for those selling servers and storage following the Brexit decision but thinks that distribution might be able to cushion price rises

The impact of the decision to leave the European Union is going to be felt in the storage and server markets as customer pause and reflect on investment decisions.

There are also pricing issues because most of the hardware is coming from manufacturers who base their activities in dollars and there will be adjustments as they try to factor in the weakening pound.

There night be a chance that some of the worst of the price rises are cushioned by the channel, according to an IDC analysis of the situation, because of their expertise in stocking up ahead of issues such as Brexit.

"The server and storage markets will see a negative effect in the short to medium term — planned datacenter modernization projects and new datacenter buildouts in the U.K. could be either postponed or delayed, because large multinational organisations will reconsider if the U.K. is the best location for a long-term datacenter investment," said Carla Arend, research director, IDC European Infrastructure and Cloud Research.

"Furthermore, the devaluation of the British pound drives server and storage manufacturers to adjust (increase) their pricing for the U.K. market, making it difficult for U.K. businesses to acquire technologies at desired budgets,” she added.

“However, distributors might delay this effect by one or two quarters as they are very savvy at stocking up when they anticipate a price rise,” she said.

Within days of the Brexit decision most of the major analyst houses rushed out some predictions of what it would mean, with Gartner forecasting negative IT spending for the next couple of years in the UK.

But with things settling down slightly and some stability returning to the political scene, in the shape of a new Prime Minister, and a timetable for when Article 50 will be triggered there are some hopes that some investments might be re-sheduled fairly soon.

Despite some of the doom and gloom that accompanied the Brexit vote there are some tech firms viewing it as an opportunity to strengthen their commitment to the UK and the channel here.

Nick Galea, CEO and cofounder of 3CX, said that it did not feel the decision to leave the EU would have a negative impact on its business.

“We don’t see it as a negative thing for our business. We are aggressively expanding in the UK and there are lots of opportunities,” he said.

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