Canalys Channel Forum: The channel is thriving

The channel has emerged from the pandemic with many experiencing growth, but there are still supply shortages and fears of rising inflation as the main challenges that will need to be navigated in the year ahead.

In his keynote at Canalys Channel Forum, Steve Brazier, president and CEO of Canalys, outlined the reasons why the channel was thriving but also noted some of the factors that could cast a shadow over 2022 and beyond.

One of the major issues in the market is shortages and while constraints on products cause headaches in meeting customer demands, the flipside is that for the first time in many years, the channel is able to encourage investments because of the likelihood of price rises for those that delay.

“What does supply shortages mean?” said Brazier. “Well, it might mean you can’t invoice an order at the end of a month records if you miss your target. I guess that’s bad news, but it also means a whole lot of good news, because with supply shortages, prices go up and you change the conversation with your customer to not which product is cheaper, but which product can I deliver first.

“There is no doubt that one of the reasons why the channel is doing very well right now is shortages and shortages will continue, we predict, at least for the next 12 months, and most likely well into 2023.”

Brazier said the pressure on the large chip plants in Taiwan meant price rises were coming and the channel would have a different conversation with those considering placing orders.

“You need to tell your customers for the first time in the history of the technology industry: “If you delay your purchase from now until next month or next quarter, you’re going to pay more than you would have done’, not less than you would have done as it used to be,” he said.

He added that the channel was benefiting from efforts made across Europe to vaccinate populations and get life back to normal and that was also sparking a return to offices and driving spending in workplace transformation.

“In terms of economic activity, shopping, high streets, cinemas are all coming back to life, almost back to pre-pandemic levels, as we go through the beginning of October. That’s great news,” he said.

Brazier predicted significant spending on networking infrastructure as offices reopened and the importance of supporting video with decent Wi-Fi became clear. Many workplaces were not in a position to support the collaborative experiences that staff had enjoyed at home, he said.

“There will be massive investments in Wi-Fi in offices and campus networks around the world over the next 12 months,” he said. “That should be the number one single growth point of the tech industry and is a massive opportunity.”

Brazier added that those with the ability to support collaboration spaces would also see strong demand.

As offices reopen, the questions about hybrid working were something that the channel, as employers, had to wrestle with, he said. Staff wanted more flexibility and there is pressure to meet that demand and get the right balance.

“Once you close your offices and you say people can live anywhere, then they will live anywhere, which means you can never recreate those offices, because everyone lives far away, and they won’t come to the offices even if you open them,” he said.

“The competition for talent just gets higher and higher, and making these decisions about when and where people work is your number one differentiator – the thing that defines your culture. Over the next 12 to 18 months, get the decision wrong, as some companies clearly have in the US, and an exodus of staff is likely – that is your number one challenge.”

Brazier also commented on the drive for more sustainability, urging the channel to do more around the issue, not only to win business, but to fundamentally save the planet.

“We’ve heard a lot of vendors make big promises – by 2030 they will be carbon-neutral, that kind of promise, governments too, by 2040 all our cars will be electric, or whatever they’re saying,” he said. “Some of those statements may please politicians, but we think it’s a more urgent priority. If you talk about a goal in 2030, what you’re saying is, ‘I’m not doing very much, but my successor might, and by the way, you would have forgotten this promise by the time it gets to 2030.

“We think the more powerful messages around sustainability and the environment are: what are you doing today? How will your business be different 12 months from now than it is today? What steps have you taken to make progress?”

The main shadow over the prospects that the channel will grow in 2022 at the same rate it has during the pandemic is inflation, said Brazier. A slowing Chinese economy, twinned with rising inflation, meant that the economic recovery post-Covid was “looking rather fragile”.

But the overall theme of the keynote was that the channel is emerging strongly from the pandemic and there has been growth. Not only that, but the experience of the last 18 months had shown the value of working in this industry.

“We are so fortunate to be in the technology industry in an economy that has had so many difficulties, whether the car industry, the hospitality industry, the movie industry, or whatever it may be,” said Brazier. “We are so lucky because every part of the tech industry, from devices, through the cloud, through to security, through to networking has done so well during the pandemic.

“The best decision you made in your life was to be employed by the tech industry in whichever job you have. The best place to be over the next decade is almost certainly the tech industry as well.”