VARs Safe from Economic Slump, for Now

 
 
By Sharon Linsenbach  |  Posted 2007-12-19 Email Print this article Print
 
 
 
 
 
 
 

Despite the slowing economy, there are opportunities for resellers in verticals and newer technologies, analysts say.

While Forrester Research's updated IT Spending Outlook for 2008 showed dampened economic expectations, analysts say VARs won't be affected unless corporate earnings take a dive. According to Forrester analyst Michael Speyer, IT spending tends to track two to three points higher than the U.S. gross domestic product. Even though Forrester revised its expectations for 2008 spending the week of Dec. 10—reporting that IT spending would grow between 4 percent and 6 percent rather than the 8 percent previously reported in October—Speyer said VARs will feel little impact.
"Unless we go into a recession, which means two or more consecutive quarters of declining growth, it's unlikely that VARs' revenues are going to fall off a cliff," he said.
"The economic slowdown and the credit crisis don't have much to do yet with corporate earnings," said Steve Tepedino, co-founder and president of Channel Savvy, a Scottsdale, Ariz., consulting group. "When [the economy] starts to have a negative impact on corporate earnings, then bringing solutions to market is going to be much more difficult for VARs." That's because many of their customers will have to slash IT budgets and reduce their spending on the products and services VARs offer, Tepedino said. He said that in the event there was a recession, midmarket customers and SMBs would be hit hardest, but VARs could shore up business by offering customers in these market segments help with financing solutions for both services and products.
"If VARs don't want to be crippled by a spending slowdown, they need to consider the impact early and bring to mind how they can mitigate any negative factors," Tepedino said. Speyer said that even with the lowered economic expectations, 2008 will offer opportunities for VARs targeting what he called "microverticals," or niche markets, and that the unified communications space would also continue to grow. PointerRead more about Forrester's 2008 IT Spending report. For example, in health care, vendors and VARs should focus on niche markets within that larger vertical market, Speyer said. In this space, VARs can specialize by targeting specific types of health care providers, organizations or even specific types of physicians and caregivers. "There have always been VARs that make [health care] their area of expertise, but what does health care really mean? Pharmaceuticals? Hospital emergency rooms? Even a dentist's office," he said. The unified communications space also is wide open for VARs, Speyer said. Because the technology touches so many aspects of infrastructure and services, VARs with a variety of backgrounds can easily find their own niche. "Within UC are so many parts of the technology stack: hardware, network infrastructure, IP telephony, [and] software," he said, which gives both traditional hardware resellers and networking- and communications-focused VARs and managed services providers opportunities to thrive within the space."
 
 
 
 
Sharon Linsenbach Sharon Linsenbach is a staff writer for eWEEK and eWEEK Channel Insider. Prior to joining Ziff Davis, Sharon was Assistant Managing Editor for CRN, a weekly magazine for PC and technology resellers. Before joining CRN, Sharon was an Acquisitions Editor for The Coriolis Group and later, Editorial Director with Paraglyph Press, both in Scottsdale, AZ. She holds a BA in English from Drew University and lives in the Philadelphia suburbs with her significant other and two neurotic cats. When she's not reading or writing about technology, Sharon enjoys yoga, knitting, traveling and live music. Sharon can be reached at Sharon.Linsenbach@ziffdavisenterprise.com.
 
 
 
 
 
 
 

Submit a Comment

Loading Comments...
 
Manage your Newsletters: Login   Register My Newsletters























 
 
 
 
 
 
 
 
 
 
 
Thanks for your registration, follow us on our social networks to keep up-to-date
Rocket Fuel