It’s that time of year again: the time to review the past twelve months of channel activity and make some predictions about where things are headed in the coming year. The enterprise space has seen some ups and downs during 2019 with an overall year-to-date (January to October) reduction in revenues driven by a -10.5% fall in the Enterprise Server sector and a -5.4% reduction in Enterprise Storage only partially offset by a growth of +4.2% in Networking. Nonetheless, we can see opportunities that mean 2020 could be a lot brighter.
Ups and downs
Some attribute the pressures of 2019 to market uncertainties caused by Brexit and the German economic slowdown that almost plunged Europe’s largest economy into recession. But the other key factor is that the server and storage markets have been hit by falls in the prices of components such as RAM, SSDs and HDDs. Despite a +15% increase in the volume of memory (measured in gigabytes) sold through the IT channel in the first ten months of the year, there has been a -20% reduction in revenues. This drop in the cost of a gigabyte is astonishing, particularly when set against the shortage of NAND two years ago.
It wasn’t all doom and gloom in 2019, though: the falling cost of memory accelerated the shift to using SSDs as enterprise storage components, and the Enterprise Networking sector grew, too, driven by sales of wireless networking products and datacentre switches. Datacentre power equipment, such as UPS systems, also saw double-digit growth in 2019, following widespread server and storage refreshes the previous year. In fact, public and private datacentre investment in Spain and Italy was one of the ways in which those countries managed to limit the overall damage to their economies.
An end to uncertainty?
We have seen from our annual ChannelWatch survey of over 6,500 resellers across Europe that B2B resellers are significantly more optimistic about the next twelve months than they were a year ago. They are planning to invest their resources in networking, cloud and cybersecurity products with workplace optimisation increasingly front-of-mind. This means that enterprise channel players are capitalising on the sustained appetite for digital-transformation spending on IT infrastructure, as companies bid to stay competitive in a fast-changing market.
A few areas to watch in 2020 will be:
There’s plenty, therefore, for channel firms to be optimistic about in the enterprise space as we enter a new decade. Stay tuned for more insights and 2020 predictions from the CONTEXT team.
© CONTEXT 2020