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Europe is 'brutal'

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Weak economic conditions are pilling on fresh misery for networking equipment companies and their channel partners in the US, and more particularly, in Europe.

A survey published by channel analysts Global Touch tells a story of a sector struggling to keep its head above water and pessimistic about early recovery.

"The networking equipment market continues to face lacklustre demand. Q4 2002 while seasonally better than the prior quarter, continues a nine-quarter streak of tough demand conditions and lagging sales," said Denise Sangster, president and chief executive of Global Touch.

Two in three (66 per cent) of US respondents to the study indicated that networking equipment sales were in-line-to-ahead of reduced sales expectations for Q4 2002.

European resellers faired much worse due to 'brutal' market conditions. Two in three (64 percent) of European respondents said sales for the quarter were below-to-extremely below sales expectations.

Vendor snap shot

Only sales of 3Com and Enterasys Networks equipment in the US showed moderate growth last quarter, with those gains set against a sales decline in Europe. Sales of Cisco System and Juniper Networks kit were flat-to-down in both the US and Europe. Extreme Networks sales were flat-to-down in the US, and sharply down in Europe.

From a 'marginal' fourth quarter, resellers quizzed by Global Touch generally look forward to next year, at the earliest, for significant growth.

US resellers predict networking equipment sales will be flat or slightly down for the next three months, but generally expect that sales for 2003 as a whole will be better than last year.

However networking equipment sales will not "accelerate" until 2004 or later, according to three in four of US respondents to the study. Meanwhile most European resellers expected the market to expand again in the second half of this year or later.

Sangster commented: "The question that no one wants to discuss is, what will happen if volumes continue to fall or remain flat through at least the first half or all of 2003?"

The data for the Networking Equipment edition of Global Touch's Channel Tracker report was collected from participants during the first two weeks in December 2002, and focuses on sales in the fourth calendar quarter (October 1 to December 31, 2002).

A summary of the report can be found here, and the full report can be purchased here for $399. A four-quarter subscription to the report costs $1,436.00. ®

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Networking vendors eat their babies
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