The 'C' word that signals recovery
If you want to look for signs of recovery then some of the clearest can be seen in the M&A activity in the channel that has already started to pick up momentum this year with this week providing examples of consolidation at vendor and reseller levels of the channel.
The week will be remembered for the surprise caused by HP buying Palm, how those at InfoSec were starting to think of dismantling their stands when the news that Symantec was buying PGP and GuardianEdge came through and of course things started off back on Monday with the confirmation that 2e2 was buying Morse.
Those in the channel with reputations for being acquisitive, and I'm thinking primarily of Avnet here, have also indicated that they are not finished on the acquisition front.
Towards the end of the press release accompanying the distributor's Q3 results was an indication from CFO Ray Sadowski that there was still money in the pot to fund further growth. "We ended the quarter with $1.5bn in liquidity to support continued profitable organic and M&A growth," he said.
Consolidation is a feature of the channel just as much as margins and MDF but as we come out of recession there seems to be a pace to it that the channel needs to keep an eye on. Perhaps it is because there wasn't the volume of deals last year but it already feels different as we come to the end of the fourth month of 2010.
The challenge for all of us is to to try and quickly work out what the ramifications of these deals are for the rest of the channel. Some will spell opportunities but others will no doubt cause resellers some problems. The key is to find out which is which as soon as possible and be prepared to do it throughout the year because this wave of consolidation is far from over.
