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The Year of Disties living dangerously

2000 will see 'significant business failures'

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Online sales will account for 12.5 per cent of total IT spending in Western Europe by 2003. According to IDC, rising Web sales over the next three years will have a knock-on effect on the traditional PC channel, with volume distributors and resellers seeing a slowdown in turnover growth. In 1999 around 45 per cent of the $239 billion spending on computer hardware, software and services in Europe went through the indirect channel, with less than 1.5 per cent of IT spend made via the Web. "The outlook for 2000 and beyond is not entirely rosy," warned Brian Pearce, program manager of IDC's European Distribution Channels Expertise Centre. "Increased pressure on hardware margins, softening of large accounts demand following the Y2K deadline, the shift in market dynamics towards smaller IT projects and the emergence of an Internet channel constitute major challenges for European distribution companies and for vendors alike." Regarding distribution, figures for 1999 indicated high growth for volume channels, but IDC expected much lower turnover growth and "significant business failures" in 2000. The VAR channel was becoming fragmented and complex, said Pearce. "New types of players are emerging in the wake of eBusiness and new market opportunities: eVars, eVAPs, ASPS. "They are all value-added, web-based and customer-centric organisations which constitute a new universe of partners for IT vendors, including traditional hardware vendors. In this respect, the VAR channel is the fastest changing segment of the European distribution sector."

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