Channelnomics has released its 2023 Channel Forecast report.
Channel partners have continued with their efforts to increase recurring revenue by accelerating their expansion into cloud and managed services. In 2023, a majority of partners plan to invest in new or existing managed services (69%), partner with service providers to deliver cloud or application services (69%), expand the marketing of existing products and services (68%), and increase their professional service capabilities and capacity (65%).
The share of vendors expecting meaningful yearly revenue growth of more than 5% is at a four-year high. Vendors are more bullish about near-term growth than channel partners, a switch from 2022. And, for the first time since 2020, the percentage of vendors that have reduced their budgets (16%) or left them unchanged (45%) is greater than the percentage that has increased them (39%).
While I’m talking about channel dynamics, Demand for PCs fell 29% year-over-year in Q1 2023, according to IDC data. The market research firm found that global shipments of desktops, notebooks, and workstations reached 56.9 million in Q1, down from 80.2 million in Q1 2022.
More important to me is the insight offered into why. IDC doesn’t expect the market to rebound fully until 2024 when many aging devices will be due for a refresh. However, the report said that recovery might be slow if recession concerns spill over into next year.
“If the economy is trending upwards by then, we expect significant market upside as consumers look to refresh, schools seek to replace worn down Chromebooks, and businesses move to Windows 11,” Linn Huang, research VP of devices and displays at IDC, said in the report.
In the next five years, small and medium businesses will prioritize infrastructure, managed services, and security spending as part of a business growth push, according to a report from Analysys Mason. SMBs, companies with fewer than 1,000 employees, are expected to increase IT spending over the coming years as economic worries subside. Companies in this category will increase IT spending by 5.4% this year, roughly in line with Gartner’s projection of enterprise spending growth of 5.5%.
According to the report, companies in the SMB category are expected to steadily increase their technology budgets each year to reach 8.3% year-on-year growth by 2027.
Telling the story here, SMB customers are anticipated to grow in line with their enterprise counterparts on spending. There’s good news in aligning what their customers expect and what they expect to buy. The delay in spending on equipment makes sense.
Interestingly, the one data point that isn’t aligning is the reduction in vendor budgets. They’re trying to do more with less, it seems. Expect them to be more challenging to deal with, even though customer demand isn’t the problem.