2024 review: Main themes in the channel

‘Challenging times’

The first time the words started to appear in financial updates and quarterly results was in the third quarter, as publicly listed channel players were forced to admit things were tougher than expected. By the end of the year, it had become a more constant refrain and used as an explanation for why growth had been flat or nowhere near as high as some had hoped.

Next year will be better

As it became clear that there would be no second-half recover,y the focus shifted to 2025. The past few months saw several contenders emerge to explain why spending would pick up. These included the expectation of a PC market refresh, AI, cloud and security all driving investments. The reality remains that customers risk falling behind their competitors if they fail to innovate and invest in technology.

The PC market

Going into more detail on the reasons as to why the PC market is expected to pick up is the winding down of support for Windows 10 and the arrival in more numbers of AI-capable devices. The first wave of products was muted in spring, but more arrived from the major players, Lenovo, Dell, HP and others, over the course of the year.

At the same time, the emphasis on Copilot grew and Microsoft’s channel began to pitch AI tools in earnest, creating another reason to move away from hardware that could not cope with the increasing demands being placed on the system.

No escape from AI

The two words “artificial intelligence“ dominated almost every conversation this year. The market and the channel might still have been at the pilot, case study searching stage, but the pressure to have a position on AI meant many began to prepare for the technology.

The year saw a move from tools that often delivered more capable search engine facilities to the introduction of agentic AI, with the promise of the technology being able to make more decisions to support users. Expect more of that in 2025 as the use cases crystallise and customers extend their adoption.

Cloud

Various bits of research that emerged across the year pointed to the continued willingness of customers to invest in cloud technologies. The hyperscalers continued to talk about the importance of the channel, with their marketplaces being increasingly populated by business generated by distributors, ISVs and resellers.

Although not spoken about with the same frequency as 2023, many customers remained on their digital transformation journeys and looked to partners to put more workloads into the cloud.

The debate about the virtues of going all-in with public cloud have largely dissipated and the channel was concentrating on helping customers work out which workloads needed to go into which environment. Being able to talk of multicloud management was a key attribute.

Security

Described at the Canalys Channel Forum in October as, “the gift that keeps on giving”, security remained a positive area for the channel. Ransomware dominated the threat charts again, but users were also looking to partners to help with zero trust, deep observability and identity rose in importance in a hybrid-working world.

Security vendors could tap into continued demand, but the sale had to be smart, with users looking for consolidation and strategic guidance around how to fend off the latest threats without adding the burden of managing a fresh range of point products.

Managed services was the chosen route

The growth in popularity of security saw many managed security providers (MSPs) add it to their offerings. Over the course of the year, the lines between MSP and MSSP blurred in recognition of the importance of providing a wide range of security options to customers.

Industry research also underlined the popularity of the MSP approach, with it clear that the vast majority of those operating in the channel viewed it as the model to follow. Having established it’s the approach to take, some within the MSP world turned to trying to make it a more profitable one. Given the complexity the channel is handling for their customers, the question of whether there is fair reward for this work provoked some discussion this year.

Consolidation

That drive for managed services fuelled most of the consolidation across the channel in 2024. As well as MSPs buying up each other to gain more skills, customers and widen their geographical reach, private equity also remained active. Financial backers continued to plough money into businesses that had a clear potential to grow their market share and plug a skills gap that was challenging their largely SME customer base.

There were a few serial acquirers looking to follow a buy-and-build strategy and a lot of same names are associated with M&A activity. Consolidation is a theme of any year in the channel, but the past 12 months saw some of the highest rates of activity and underlined just how attractive the channel is to the private equity community.

Partnerships matter

Backing a vendor involves time, money and commitment from a partner, and 2024 was a year when making those bets was challenging. Some of the big names wobbled, such as Intel, and others became targets of rivals questioning channel strategy, such as Broadcom. With the growth of AI, there were also some fresh names to get acquainted with and channel opportunities to identify. The year also saw a raft of partner programmes launched with the ambition to make life easier for the channel. 

Sustainability

There were some fears that commitments to net zero and reducing carbon emissions would be scaled back if the economy was tough. There was a degree of that, but the industry continued to remain focused on improving its position and working collaboratively to share best practice overall.

As one source bluntly put it, it remained important because people around boardroom tables understood it had an impact on the bottom line. That is not going to change, but as the early starters get beyond Scope 1 and 2 and into the difficult Scope 3, it is getting harder.