Will DIstributors Economic Cold Infect the Channel?

The latest quarterly financial reports from top channel distributors have been somewhat disappointing, unlike reports from channel vendors that show overseas sales are compensating for the economic slowdown in the U.S.

Ingram, Avnet and Arrow all recently announced their latest sales, and they all suggest a decline in IT purchasing is beginning to be felt. The Ziff Channel Insider site has an interesting roundup about this topic.

What is interesting is that large system integrators and channel vendors don't appear to be experiencing the same problem, at least not yet. The distributors' experience, which shows slower server sales pulling down revenue and profits, could be an unwelcome harbinger. The key issue for IT spending and the channel in rocky economic times always surrounds the willingness of businesses to spend more on technology when the economy is softening. They usually do, at least for awhile, as long as the investments demonstrate a strong ROI. However, when the overall economic situation starts to tank, the enterprise and SMB customers pull back. We are not to that point yet, and the hope is that falling interest rates and the effects of the economic stimulus package (which will start to be felt by consumers this week) might be enough to forestall the really serious economic damage that copuld impact the channel.

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