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Enterprise system sales set to remain subdued into early 2021

Enterprise system sales set to remain subdued into early 2021

Enterprise system sales set to remain subdued into early 2021


Of all the IT channel segments tracked by CONTEXT over the past year, enterprise systems have perhaps been among the hardest hit. Mass remote working directives across Europe coupled with the economic trauma to national finances have significantly affected server, storage and networking sales in the region.

This is likely to continue through the fourth quarter and into the new year. However, there are some bright spots where growth may exist, such as in enterprise security or infrastructure consumption model services.

A tough year

It’s been a difficult year for enterprise system vendors and channel players. The unprecedented business and economic conditions led many organisations to understandably withhold investment in datacentre and networking hardware. Thanks to the much-anticipated recent second wave of COVID-19 infections and continued economic sluggishness, we are not expecting any significant recovery in IT infrastructure sales in Q4.

Networking sales continue to be negatively impacted by the extended remote working trend. With offices lying dormant across the region, few companies are planning to buy or renew networking equipment such as switches or wireless access points. It’s difficult to see that changing much in the early part of next year, until vaccines become broadly available.

Though, we expect a small boost towards the 2nd quarter of 2021 in terms of infrastructure sales as projects will resume inevitably along the economic recovery. 

Consumption models are taking over

Apart from the economic slowdown impacting the demand and investments, another reason of the low demand of on-premise infrastructure in the channel is the increased use of cloud service consumption models for storage and compute in order to leverage existing datacenter hardware with financial flexibility.

We observe also that businesses are increasingly interested by consumption models linked to on-premise infrastructure. With vendors ramping up their on-premise hardware consumption model offers and packages to make business easier in a multi-tiered environment, we expect to see the revenues attached to those models to grow in the next few quarters through the channel

Security to the rescue

However, there is hope for further growth in enterprise cybersecurity. Workers may be located in home offices now, but they still need endpoints protecting, or attackers may be able to exploit vulnerabilities to compromise corporate networks and cloud-based data stores.

That’s why this segment will continue to grow in Q4 and beyond. With distributed working likely outlast the pandemic, it’s an area which could reap rewards for the channel for some time to come as organisations adjust to a “next normal.”

By GM


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