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Discuss this article (0 Comments)The summer of discontent?
by This email address is being protected from spam bots, you need Javascript enabled to view it on Sunday, 31 May 2009
The temperatures are soaring and June is almost here, which for most IT providers means an inevitable slowdown in activity. So, after the challenges faced by the market already this year, what does the summer hold for the Middle East IT channel?
If the regional IT market is to experience a revival in fortunes during the course of 2009 then you are unlikely to find many people who think it is going to happen over the next three or four months.
The summer season is notoriously regarded as the lowest point of the year for IT sales at the best of times, so for a market that has been contracting — or at the very least no longer tasting the growth that it did before — it is not surprising that channel members fear the worst.
Whoever you talk to in the market — from retailers and consumer-focused suppliers to powerful IT services providers and corporate resellers — the general consensus is that the market is unlikely to see any relief until September at the earliest.
Which begs the question, what exactly should the channel do in the meantime?
At a conference I attended recently, a leading market analyst told an audience of channel companies to use any quiet spells they encounter to look inwardly at their own businesses.
His point was that organisations should exploit any spare time to revisit their strategies, review internal processes and tweak their business models so that the engines are fully revved in anticipation of the end of the third quarter, when the market hopefully begins to pick up again.
One supplier I spoke to was particularly scathing of that advice, arguing that companies can’t — and don’t — just stop business for a few months to tie up loose ends, however practical it might sound.
Given that same person later admitted his company planned to use the summer to reassess its sales channels, I suspect the real point he was trying to make was that business won’t grind to a complete halt and although every company would relish the opportunity to fine-tune any organisational shortfalls, there are still monthly numbers that need to be done.
Fears have been raised that the summer sales drought could cripple resellers rumoured to have been clinging on for dear life over the last few months, although if current form is anything to go by then it is more probable that we will see companies chop headcount or hold back payments than go to the wall completely.
If anything, the most serious problem is that nobody is really any wiser than their neighbour about what path the market is going to take, simply because overall visibility remains so poor.
A digital lifestyle products distributor I spoke to last week revealed its sales had been surprisingly strong in February and March, but had tanked for no expected reason in April and May, illustrating the kind of volatility the channel is up against.
There are, of course, numerous examples of channel companies that claim to be enjoying strong growth and finding new ways to expand their businesses. But while such unpredictability persists, the true picture continues to be dangerously hazy. Maybe it is that uncertainty which is making the market more anxious as the mercury rises.
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