Tag: Canalys

VR will be a bit hit in education and healthcare

Abraham-discovers-virtual-reality--128960The people of the divination division at beancounters Canalys have been shuffling their tarot decks and concluded that virtual reality headsets will be a hit in verticals such as healthcare and education.

Canalys said the emerging device category has just racked up its first million-unit quarter and shipments reached seven figures for the first time in the third quarter.

This was due to a price war among leading players such as Oculus and Sony which saw consumers start to buy.

Canalys analyst and auger Jason Low said that VR headsets are set for “strong uptake” in the business market from next year as new A-brand PC entrants supporting Microsoft’s Windows Mixed Reality platform begin to push their products through the channel.

“VR in business can be applied to many industries, such as manufacturing, healthcare and education,” said Low. “As top-tier PC vendors, including HP, Lenovo, Acer, Asus and Dell launch their own VR headsets, using their distribution channel efficiencies, one can expect a strong VR uptake in business.”

Canalys’s definition of VR excludes simple viewers, such as Samsung’s Gear VR and Google’s Daydream View. Oculus – one of three players alongside Sony and HTC which together account for 86 percent of the market according to Canalys – recently slashed the price of its Rift headsets to $399.

Canalys thinks that things are getting very indirect

directListening to Canalys CEO Steve Brazier bang on in Venice you can’t help but think that the direct model is going to die a death.

Talking to the annual conference over cheese on a stick and drinkies Brazier said that channel partners are doing well and the European economy is looking better that it has done for the last ten years.

He said that there were more opportunities for the channel now than there have ever been.

This year, over the first half, distributors grew 4 to 5 percent and channel partners improved by seven percent on average.

Brazier, at the Channels Forum event, spoke of the way vertical markets, from retail, transport, health and public sector, were all “embracing” digital technology and using the channel to roll out those services.

The move towards edge computing is also driving a lot of growth and Brazier expected a growth in ‘micro clouds’ as resellers provided services closer to user data and applications.

There was also a mention of security, with that segment enjoying the strongest growth as a result of the increasing threats and factors like GDPR driving spending across Europe.

However the wholesale move towards becoming a predominately software and services business is probably going to be as grim as the life expectancy of a wedding guest in the Game of Thrones.

“This has been the year where the vendors have been preaching digital transformation to you. They are not only trying to talk to you about selling more stuff, they are trying to battle for your thought leadership in where you will take your thoughts forwards,” Brazier said.

“I’m sure you have been told you need to change the way you engage with customers and invest more in digital marketing and retrain your sales force,” he added.

Brazier warned that listening to the vendors, which had their own agendas, could undermine the future strategy.

“Should a partner that’s reselling infrastructure, PCs and software should they change? Probably yes,” he said.

Canalys is predicting that hardware will still contribute over 50 percent of revenues for 90 percent of partners in 2020.

“Whoever told you selling hardware was dead is completely wrong. The PC is suddenly the most profitable part of your business again”, said Brazier.

Microsoft will shun the Surface

78e36c498415cefec2abe253e3990285Canalys CEO Steve Brazier is predicting that Microsoft will drop its Surface business by the end of 2019.

Talking to the assembled throngs at the EMEA Canalys Channels Forum event in Venice, Brazier said Vole is undergoing a “capital expenditure challenge” under CEO Satya Nadella and the Surface project will pay the price.

Brazier said that Nadella was a software and cloud guy who has already allowed Microsoft’s mobile phone business to decline. The Surface’s performance was choppy – it has had good quarters and bad quarters but overall it is not making money.

He thinks it made no sense for Microsoft to be in this business and when the capital expenditure challenge that Satya Nadella has a lot of cost cutting to do, and Surface will be the first target.

Product sales fell for Microsoft in Q2 by 1.5 percent to £9.7 billion while Surface sales dipped two per cent having previously plummeted by 26 percent in the previous quarter.

The general feeling is that Vole is making a lot of money on the cloud and enterprise and on Windows, losing cash on devices and I see no reason why they would want to continue with the Surface.

Brazier also predicted that this quarter will prove the highest growth quarter for the western European tech industry for 10 years.

The CEO forecasted that 50 percent of cloud sales will go through two-tier distribution by the end of 2019 and also claimed that channel partners will grow by five per cent per annum over the next three years. Lastly, hardware sales will account for at least 50 per cent of revenues for at least 90 percent of partners by 2020, according to Brazier.

“Hardware is not dead. Hardware will be half of your revenues through to 2020. Do not listen to your investors telling you to get out of hardware and into services. There is no evidence to support that at all”, he said.

Cloud giants need channel for next phase

ae75610647df615b38555f1bc5ac6896Market analyst outfit Canalys says that the cloud giants such as AWS, Microsoft and Google are embracing the channel as they look to capitalise on the “next phase” of cloud adoption.

AWS, Microsoft and Google grew their cloud infrastructure revenues by 43 percent, 93 percent and 74 percent respectively in Q1, year on year, as the overall market rose by 42 percent to $11.4 billion, Canalys said.

But the big three have worked out that building an indirect business will be the only way to maintain that order of growth,

Canalys principal analyst Matthew Ball said that the next phase of cloud adoption means that they are looking at corporate and mid-market accounts, and for that they need greater reach and scale, and to do that they need the channel.

Big cloud providers, AWS and Google have not come from an enterprise IT background so they are starting to mature their partner programmes and channel engagements.

They are looking to focus on that more because they recognise that the channel has those relationships with customers.

Canalys thinks the channel will be a part of their go-to-market strategies, especially if they want to maintain their high levels of growth each quarter and year.

Canalys pegged AWS’ Q1 cloud infrastructure sales at over $3.5 billion but the market leader’s success need not be at the cost of the channel, said Ball, who argued that the rise of cloud has in some cases expanded the role played by resellers.

Ball said that the channel has made good business selling datacentre infrastructure in the past, and will do so.

Cloud is another choice for customers in terms of how they operate their IT environments and, for sure, it’s a concern for channel partners. Some partners have been affected by cloud and others changing their business model to develop consultancy or professional services to help their customers define a cloud environment.

SMEs expected to send SOS to resellers

SOS-300x217GDPR data regulations are nearly a year away from implementation and Canalys is expecting more SMEs to turn to resellers for help prepare.

Canalys said that GDPR data regulations are going to lead to revenue for the channel particularly from the SME customer base.

Forecasts from Canalys have highlighted the security spending that is going to come across Europe as firms get themselves compliant with the data protection regulations.

The analyst house is predicting a 16 percent increase in the Western and Central Eastern European security market, reaching $11.5 billion in 2018.

Some customers are better prepared than others with the channel heartlands of the SME community needing a bit of help from resellers.

Canalys senior analyst Nushin Vaiani said large businesses are well informed on information security regulations, with resources in place to ensure compliance.

“With ransomware threats such as WannaCry causing havoc, shareholders will be more willing to accept increased data security and compliance budgets to protect their long-term investment,” Vaiani said.

“SMBs naturally have fewer resources, putting constraints on implementation. But there are potentially massive fines for non-compliance with GDPR, putting SMBs under threat of bankruptcy. Businesses must take action now to safeguard from this danger,” Vaiani added.

Amazon’s channel expansion “a misunderstanding”

hqdefaultThe drive behind AWS’ channel expansion plans have been misinterpreted, according to the cloud giant’s technology evangelist.

Ian Massingham said that claims that AWS is using the channel as a vehicle to scale its business are completely misunderstood.

The idea was mooted by Canalys which claimed that AWS and Google were embracing the channel as they seek to exploit the “next phase of cloud adoption”.

The analysts claimed that focusing more on partners will be the only way the cloud giants, some of which do not have a background in enterprise IT, can maintain their frenetic growth rates.

As a result, AWS grew 43 percent in Q1 and Google by 74 percent, Canalys claimed.

Massingham said that while Amazon has an increasing number of partners that are working with AWS, the reasons were up the spout.

“But I think the rationale that this is an AWS-centric activity that we would initiate because we want to sell more stuff is not the reason we are doing it. We are doing it because customers want to move more quickly than they can move alone, and partners can play a really important role in helping customers accelerate their adoption and therefore deliver the benefits that cloud offers,” he said.

AWS now commonly counts as a top vendor for many traditional resellers and services firms, with Computacenter, for instance, having built a 50-strong European AWS practice.

Partners were reacting to customer demand. There aren’t enough AWS experts around today to help customers move as quickly as they can. So partners can play a really important role in helping customers get to that new reality by bringing in the skills they’ve been able to hone through repeated engagements. It’s typical of a mid-sized partner to have 50-plus certified AWS experts on staff, he said.

Vendors need to fight public cloud propaganda

The battle for the hearts and minds of public cloud users is being won by AWS, Google and Microsoft, and MSPs need to fight back before they become unstoppable.

Canalys CEO Steve Brazier told the outfit’s Channel Forum that the traditional IT industry has to fight back to remind customers that there is an alternative.

He said that Dell, HPE, Cisco and Oracle were all talking about cloud, but there is a danger that they, along with their channel partners, will be swerved in favour of AWS, Google and Azure because the buyer has been swayed by them.

There was a danger that the three big public cloud providers could become “too big to fail” with too many customers putting data through their platforms.

His logic is fair enough. In the last year AWS grew by 59 per cent, while both Microsoft with Azure had grown their cloud by 100 per cent.  All this was on the back of the giants leaning on their clouds.

Basically it means that Lenovo, Dell, HPE and others doing more to counteract the public cloud argument and to work in a more co-ordinated way to present an alternative PR message.

Customers need to be worried that will be locked in to platforms and if one of these big companies go down then millions could be hit.

Dell jacks up Brexit prices

michael-dell-2UK suppliers are already having to pay the cost for the UK’s Brexit referendum result – Michael Dell is already jacking up his prices by eight percent.

Dell increased UK prices across its portfolio by eight or nine percent, according to its partners. He is not the only one.  Canalys warned that US vendors will begin hiking the prices of its products feared the UK IT market could shrink by as much as 15 percent next year.

Dell tends to hedge everything against the dollar on a quarterly basis. It was expected that he would do it in August but it was brought forward.

Fortunately, all the suppliers are in the same boat and no one is going to get an advantage out of this. However, it does makes sales teams look a bit stupid if they quoted a price one morning and are having to jack up the prices a few days later.

The worry is that clients will start looking at their budgets again and wonder about suspending projects until things have settled down a bit.

In a statement, Dell said:

“Dell’s priority is always to provide great value to our customers and partners. We carefully consider price moves for our customers and partners, and have worked diligently over the past several months to postpone any increases pending the outcome of the EU referendum. In line with the rest of the industry, our component costs are priced in US dollars, and unfortunately, the recent strengthening of the US dollar versus the euro and other currencies in the EMEA region, following the UK’s decision to leave the European Union, will have a direct impact on the price we sell to our EMEA customers and partners.

“We understand that this is an uncertain time for many British businesses and we will continue to work closely with our customers and partners to provide great value products and services,” a spokesDell said.

Dell kisses and makes up to the channel

Dell logoDell’s chief commercial officer, Marius Haas, tipped up at the Canalys Channel Forum today to talk about how it’s vastly extended its channel programmes worldwide.He faced the channel audience like Lenovo’s executives did before.

Haas said that 70 percent of enterprise customers prefer to work through the channel. Of course, at one time, practically all sales were direct. Forty percent of its share is now through the channel and it’s invested $125 million in programmes.

In some countries 100 percent of its business is through the channel, Haas said.

Dell going private has been a catalyst for change, Haas said. It doesn’t have to bother thinking about shareholders now, just customers. Dell now has five and 10 year plans and is thinking long term.

Haas said Dell had made great progress with enterprise customers and talking to distributors about how to win more customers.

Dell now has a two tier distribution model because it gives an opportunity to be more aggressive in terms of customer wins.

Customers he said, aren’t looking for more vendors and would like one vendor to supply software, services and hardware, Haas said. “It’s a holistic conversation,” he said. “In the thin client business it starts with end user experience but very quickly moves to the apps the customer would be running, and what’s the storage system, and what’s the software to manage it.”

Haas said that he wants both direct and indirect business to grow. Channel business is growing faster than direct sales, he said.

Dell has hired senior executives who have channel in their bloodstreams. “Dell is committed to the channel,” he said. Dell will create more opportunities and generate demand for the channel.

Meg Whitman describes HP’s amicable divorce

Meg Whitman, photo by Mike MageeMeg Whitman was quizzed by the audience at the Canalys Channels Forum in Barcelona, today.

She said that the reason for splitting the company was to be more focused. She said it was remarkably complex on all fronts whether it was the IT or the supply chains HP used.

On August 1st HP started operating as two separate companies she said, and on November 2nd there will be two separate Fortune 50 companies.

She believes that HP will demonstrate the success of the separation. The two companies will be called HP Inc and Hewlett Packard Enterprise. She said HP wanted to avoid inventing a new brand name and wanted both companies to be linked to the HP heritage.

HPE will have a green rectangular logo. HPE will include HP financial services. On November the 2nd, both companies will probably still be in the same buildings. She said that there’s a joint venture between HP Inc and HPE to work together on the supply chain to leverage the size.

Whitman said the biggest challenge was the IT separation. She said the company had to change emails, URLs, servers, and the rest. She said HPE will be a much faster and agile company but one thing that won’t change is partner focus. “Channel is in our DNA,” she said.

Whitman said she has rooted out the “nay sayers” in the company. She said the separation means both companies will have something of a rebirth. Everyone in both companies is going to be “fully engaged”.

She said HP has increased R&D spending every year for the last four years. She said in a software defined world infrastructure matters more than ever. She thinks configuration of infrastructure to apps will be an important part of HPE’s strategy.

Software is only seven percent of revenue but HPE is about providing answers for the new type of IT.

She said that the slimming down of headcount in the services business recenrly was intended to make that business unit leaner and meaner and HPE expected revenues in that sector to grow.

She said the Safe Harbour provision that the EU court ruled was invalid yesterday wouldn’t affect the two companies too much, because data was generally held locally. There may be changes but she believed HP set that process going four years ago.

One question from the audience that was asked, but wasn’t aired,  was whether Whitman would vote for Winsome Carly Fiorina as president of the USA.

Channel looks like it’s onto a winner

onedollarSteve Brazier, CEO of Canalys opened the Channel Forum conference here in Barcelona by ourlining how he and his company of analysts view the tech industry.

He said PC makers have been cheating on benchmarks for years but without the consequences Volkswagen is experiencing.

He said the industry is much more complex than it used to be.  It’s hard for everyone to keep up with everything. Complexity, he said, is good news for channel people.

He said that the crash in oil prices is good news for European countries. But countries producing oil and commodities are going to have some difficult times including Brazil, and Australia.

But the strength of the dollar means prices have gone up in 2015. Putting prices up has clearly reduced demand.

He said there’s been a massive shift in spending into service providers and datacentre growth. Close to 50 percent of all servers that ship this year will go into datacentres. This slim margins. investment is driven by consumer companies.

Datacentres are building white box systems and even if the big brands win big server orders it’s at extremely slim margins.

But more datacentres means networking and security sectors are growing. Bringing compute and storage in a single console benefits a certain kind of customer.

Nutanix and Simplivity would like to be bought but the price may be too high.

The client computing market is only 13 percent for the first half of this year. The smartphone industry is moving away from operators. Large smartphones in the first half of this year showed 110 percent growth.

The tablet and notebook PC markets are disappointing. The industry has had too much inventory and negative scales, declining by nine percent in the first half of this year.

Microsoft invented the hper converged notebook category while Apple and Google are following suit. Microsoft is now competing directly with their OEM partners.

There’s a shift for Apple to to an all Apple microprocessor model. Microsoft hasn’t helped the channel or the OEMs with its free Windows 10 upgrade. Google products could make real headway. Google will put pressure on Microsoft and Intel.

When companies are struggling they become defensive.

Cisco has been through dramatic personnel changes in the last four months but Canalys expects it to exit some businesses but the new “vision” is still to come. A CEO change is likely at EMC.

Dell is now committed to two tier distribution through the channel. IBM lacks agility and it lacks growth. Microsoft’s new CEO has done a much better job than the previous CEO and has shifted to services and apps rather than Windows. Azure is only behind Amazon in terms of cloud services.

Cloud computing still has its challenges but the industry has moved so far to the model that it can’t go back.  Software as a service is the primary model everyone will have to deal with.

The channel is doing very well and some good things are happening.  We’re expecting a major UK channel partner to do a public flotation this year.  He said that the channel has had to bolt on different services including managed services, cloud security and co-location.  Creating a channel mix can be very lucrative.

Distribution has shown year on year growth in the European sector. The operating marin in Q2 amounted to 1.1 percent.  European distributors have grown over the last three years.

 

 

There is “no reason to believe” in tablets

Dodo-birdTablets have gone the way of the Dodo and the hula hoop according to bean counters at Canalys.

The analyst said that in Q2 of this year, global shipments slumped 11 percent annually to 42.5 million units. Shipments in all global regions fell annually in the quarter, and the outlook for the months ahead is not positive.

There is “no reason to believe that growth will return in the short term,” the analyst said.

The market has been killed off by a move to large-screen mobiles and the fact that larger devices will have to compete against a range of two-in-one devices optimised for Windows 10.

Canalys’ senior analyst Tim Coulling insists that the market may not be dead, but might just be resting. He suggests nailing it to its perch in case it goes Vrooom.

“Despite the sudden downturn in shipments, tablets are certainly here to stay,” he said. “Yes, they have matured and commoditised quickly, but there are still opportunities for vendors to profit from the category.

“Unlike consumers, businesses have been slow when it comes to mass adoption of tablets. They are willing to spend more on products that satisfy a specific need and meet key requirements, around durability for example. In the consumer space, demand for premium tablets in established markets has noticeably slowed but is not going to disappear.”

Samsung kicked in India

India_flagSamsung is being pushed out of its key Indian market by a local budget smartphone maker Micromax.

Micromax has become the leading supplier in India’s booming smartphone market for the first time in the fourth quarter.

According to beancounters at research firm Canalys, New Delhi based Micromax accounted for 22 percent of smartphone sales in India in the October-December quarter, ahead of Samsung’s 20 percent. In total, 21.6 million smartphones were sold in India in the period, a 90 percent surge from a year earlier.

India, which has the world’s second-highest number of mobile phone accounts after China, is the third-biggest market by number of smartphones sold. Low-priced smartphones are the top sellers in a country where many buyers are upgrading from feature phones.

Micromax’s performance was partly due to its “continuing appeal to mobile phone users upgrading to smartphones,” Canalys said.

It estimated nearly a quarter of smartphones sold in India in the fourth quarter were devices priced under $100, while 41 percent of devices sold were in the $100-$200 range.

Micromax and Samsung were followed by two other Indian budget smartphone brands, Karbonn and Lava, by number of handsets sold in fourth quarter. Japan’s Sony Corp said its net annual loss will likely be smaller than previously forecast after cost cuts and higher-than-expected sales of its image sensors and PlayStation video game consoles helped its third-quarter profit beat estimates.

 

IT as a service makes the grade

Clouds in Oxford: pic Mike MageeA survey performed by Canalys says that 96 percent of respondents, mostly based in the distribution and reseller segments,  said they now offer “IT as a service”.

That includes managing customer assets on premises, or using hosting or public cloud services.

Vendors use the channel to sell their products and while reselling products is the most important set of sales for two third of channel partners, these types of sales are growing.

Rachel Brindley, research director at Canalys said that 58 percent of the firms surveyed think that managed services is more profitable than just selling software and hardware.  And by 2017, two third think IT as a service will represent more than a quarter of revenues.

But the channel isn’t stuck in the cloud. They fear that cloud providers will bypass their traditional value added businesses.

“Vendors developing go to market strategies for the cloud must ensure they are not increasing competition with their established partners but recognise this is typically delivered as part of a hybrid IT offering,” said Alex Smith, senior analyst at Canalys.