VAR outlook: Q2 'subdued,' Q3 to improve

Posted on July 08, 2008

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By Dave Simpson

-- Robert W. Baird & Co. recently completed its quarterly survey of the VAR market and concluded that Q2 results were "subdued" and that VARs were expecting a "slight improvement" in the third quarter.

Baird surveyed 57 enterprise resellers, with total annual revenues of approximately $11 billion.

Regarding Q2 results, 27% of the respondents were above plan, 43% were on plan, and 30% were below plan. Baird analysts noted that, as with the Q1 2008 results, the Q2 results were the weakest they have seen since initiating the VAR surveys in 2004.

Regarding the third quarter, about 50% of the resellers expected conditions to remain challenging, with about a third of the respondents expecting an improvement in Q3.

However, the analysts noted that the storage sector is expected to outperform other segments of the IT industry.

Baird analysts cited storage as the key area of strength going into the second half of the year. Other IT categories with positive expectations include networking and server/desktop virtualization. Segments that are expected to be particularly weak in the second half of the year include PCs and non-blade servers.

In terms of vendor performance in the second quarter, VMware topped all vendors with a +11 net score ("above plan" minus "below plan"). NetApp came in second with a +6 score (and ranked number one as being the most "channel-friendly" vendor). Other storage vendors with positive net scores included CommVault, Dell, and Data Domain.


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