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Ukrainian separatists threaten surge in *gasp*... dealers, PCs

Don't mention the war, resellers

Channels Forum 2014 The IT industry has pulled back from the brink of disaster but conflicts in Russia and the Middle East have the potential to push it back to the edge, resellers and distributors were warned today.

Kicking off the Channels Forum conference in Cannes, Canalys CEO Steve Brazier declared the victory of the channel, the revival of the economy, and even the return of the PC as a viable form factor.

While vendors were seeing flat growth overall, Europe had outperformed Asia and the US over the last nine months. But Brazier said when it came to the channel “we’re growing around eight to ten per cent as a community.”

“The channel has won. The channel is thriving. The cloud will not kill the channel,” he thundered.

More counter-intuitively, he declared that while the industry’s pulse was no longer tied to the release of new Intel processors and Windows OSes, the PC form factor had returned to health.

This was in part down to vendor consolidation, with the exit of vendors such as Samsung and Sony from the market recently boosting the consumer market. The much heralded XP refresh had indeed boosted the corporate market, with the coming year likely to see a similar boost in the server market as Windows Server 2003 bites the dust.

At the same time, he said, tablet sales had stalled. While the iPad had initially been competitively priced against laptops, this was no longer the case. Meanwhile, at the lower end, phone screens had gotten larger, eroding smaller tablets’ USP.

Brazier added that firms which had previously largely shunned the channel – such as EMC and Dell – were making concerted efforts to woo disties and service providers as they navigate the new landscape.

In an on-stage chat, Meg Whitman, HP CEO, said the PC industry had had a “delightful couple of quarters.” She echoed Brazier, predicting there were some months of XP refresh, and the corporate end of the market faced an even bigger boost as Windows Server 2003 bites the dust.

But while the industry had had a good year, with a benign economic environment giving vendors and resellers space to grow, there were definite clouds on the horizon.

The obvious worries close to home were deteriorating relations between Western Europe, the US and Russia following the crisis in Ukraine.

Brazier said sanctions on Russia had hit the IT industry there, and would lead to a backlash from the authorities there against US vendors. He added that China was also taking a harsh stance against US vendors, with its recent banning of Windows 8 in government.

But Brazier sketched out the broader impacts. The sanctions on Russia had meant the freezing of exports of fresh foods from Europe to the country. This has led to price drops, which in turn could lead to deflation, and an undermining of the recent Eurozone economic recovery. More tangibly, a weakening Euro would mean effective price rises on tech products, which are normally priced in dollars.

Brazier also pointed to the fact that current conflicts – in the Ukraine, and more widely in the Middle East – were inextricably bound up with energy concerns. Even as data centres become massive energy guzzlers, parts of Europe face the prospect of blackouts later this year, he said.

Sticking with the political climate, Brazier said the industry continued to face fallout from the Snowden disclosures last year, beyond the Chinese backlash. Data residency was driving the siting of data centres in Germany and Switzerland by the likes of Deutsche Telecom.

However, he said much hung on the result of an appeal by Microsoft against a US court decision forcing the handing over of emails residing on a server in Dublin.

Customer concern over the issue was having an undoubted impact on product design, Brazier continued, noting the inclusion of on device encryption in iOS 8. With Android not far behind, “there’s obviously been some talking,” he noted.

This chimed in with the profile of security concerns: the number one issue for CIOs, according to Canalys’ research. For the channel, it was important to focus on security from the outset, as “it gets you beyond the IT department.” ®

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