Vendors to turn to channel for Net sales

ISPs gain power

ASPs, ISPs and eMarketplaces will account for 30 per cent of online channel business by 2004, according to IDC. It predicts that shows that online IT sales to Western Europe end-users will "rise sharply" from $4.8 billion this year (1.7 per cent of the IT spend) to $67.4 billion (15.9 per cent) in 2004.

IDC says the growth of online sales in IT products and services will see the "predominance of vendor direct sales and PC hardware waning while new forms of software distribution and use boom".

IDC also forecasts that online sales by indirect channel partners will "overtake those of IT vendors selling directly via the Internet". It reckons that direct vendor share of online IT sales will fall from 77 per cent this year to 43 per cent in 2004, with indirect partners overtaking them some time in 2003.

"Web-enabled sales will explode as businesses and consumers seek the convenience of placing orders via Web stores, extranets, and emarkets," said Brian Pearce, IDC research manager.

"Until now, online sales have been strongly associated with vendor direct sales and PC hardware. The near future will see online sales breaking with the past as IT resellers push more of their business online and as software editors, application VARs, and ASPs shift to electronic software distribution and application rental," Pearce said.

At the same time emarket and "services-focused Internet companies" will play a growing role in IT distribution through reselling, solutions hosting, and referral, IDC reckons.

It estimates that ISPs, ASPs, and emarkets could, as distribution channels, potentially account for almost 2.6 per cent of total IT spending in 2004. This proportion may seem modest, but, IDC points out it represents almost 30 per cent of the online sales forecast for indirect channel partners overall.

IDC selects ISPs as the most important new e- distribution channel. And it says that vendors are rushing to incorporate new players into their channel structures, in an attempt to get to grip with the SME market. ®

This article has also appeared in Microsoft Partner, a Web site for UK resellers.

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