VARs see improvements in Q3

July 20, 2009 – Robert W. Baird & Co. recently completed its quarterly survey of enterprise VARs, and although Q2 results were flat there is some optimism regarding the second half of this year – particularly regarding technologies such as, not surprisingly, data deduplication and thin provisioning.

The firm surveyed 47 IT resellers with total annual revenue of $11.4 billion and average revenues of $261 million per year.

Results for the second quarter were split, with 43% of the server/storage VARs below plan, 44% on plan, and 13% above plan. However, there were signs of optimism (albeit guarded) for the rest of the year, with more than 75% of the survey participants expecting Q3 to be flat or up and the remaining VARs reporting either limited visibility or expectations that Q3 will be worse than Q2.

Specifically, 54% of the survey respondents expect the third quarter to be the same as the second quarter in terms of revenue; 22% expect is to be more positive; 12% expect it to be more negative than Q2; and 12 % said that it was too early to tell.

In terms of technology, as in the previous few surveys, the hottest revenue growth opportunities lie in cost-saving, infrastructure-optimization technologies. In the storage sector, that means data deduplication and thin provisioning. (ok, maybe EMC’s acquisition of Data Domain was worth $2.1 billion, although I still say it wasn’t. See “EMC out-trumps NetApp, or not.” ) VARs also cited solid-state disk (SSD) drives as a growth technology.

In a more general sense, storage and virtualization are expected to be the strongest areas for IT spending, while PCs and servers are expected to remain relatively weak.

Server virtualization is increasingly seen as a “must have” technology, with 68% of the Baird survey respondents saying that server virtualization is in strong demand and the remaining 32% saying that it is ramping moderately. In a related finding, virtual desktop infrastructure (VDI) is gaining momentum, with 62% of the resellers noting that VDI is either ramping moderately or experiencing strong growth – up from 39% in Baird’s Q1 survey.

Interestingly, in terms of vendor strength Baird analysts note that heavyweights such as EMC, Sun, HP, Dell and IBM lagged vendors of lower-cost, more innovative technologies, such as Compellent, LeftHand and Data Domain. Dell and IBM were particularly weak in Q2, with 83% and 69% of the VARs below plan, respectively. Conversely, Cisco and Compellent had notable sequential improvements in the reseller rankings, according to Baird analysts.

Finally, VARs ranked NetApp and LeftHand as “the most channel friendly vendors.”

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posted by: Dave Simpson

Dave Simpson, Editor-in-Chief
by Dave Simpson
Editor-in-Chief

Dave Simpson has been the Editor-in-Chief of InfoStor since its inception in 1997. He previously held editorial positions at publications such as Datamation, Systems Integration, and Digital News and Review. He can be contacted at dsimpson@quinstreet.com

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