[BusinessTeam] Importance of software resellers undiminished

Message-ID: <6B75EF096AE0BE428B8CEDEA89C5F6327822F2@exchange01.lab49.com> · Mon Dec 04 23:25:33 2000 UTC

Importance of software resellers undiminished 
by Margret Johnston, IDG News Service\Washington Bureau 
December 04, 2000, 13:08 	
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The indirect sale of software by channel resellers is growing steadily
despite the arrival of application service providers (ASPs) and other
forms of distribution, a report by International Data Corp. says.

Channel sales will continue to play a major role in worldwide software
distribution, helping end-user software spending increase to $343 billion
by 2004 compared with last year's $169 billion, a compound annual growth
rate of 15 percent, IDC said in a release issued Monday.

The news release cites IDC's Worldwide and North America Software Sales
Channels Forecast and Analysis 1999-2004, published amidst signs that some
software vendors have started to rethink their channel strategy as a
growing number of businesses start to favor direct sales.

But Steve McHale, director of IDC's Software Partnering and Alliances
program, says the emergence of new models often causes market observers to
prematurely discount the role the channel plays in their evolution. In the
ASP model, the need to actually sell the rented software service is often
forgotten. The ASP market's ability to engage and enable the traditional
channel is critical to its long-term growth, McHale said.

According to IDC, the three primary software markets -- application
solutions, application development/deployment, and system infrastructure
software - will increase their reliance on indirect channels, and by 2004
indirect sales will comprise 44 percent of the software market. The market
that will grow the fastest its indirect-sales volume is application
development/deployment, with a 1999-2004 compound average growth rate of
21 percent. By comparison, the software markets' combined compound average
growth rate is 16 percent during the same period.

Based on its research, IDC believes the single-tier resale outlook is
positive. In North America, product revenue through value-added resellers,
system integrators, consultants and dealers is expected to grow from $16.3
billion in 1999 to $37.5 billion in 2004.

The growth is expected to be moderated as vendors move more of their
direct relationships with resellers over to management by distributors,
although the pace of this transition will be determined largely by
distributors' investment in supporting more complex software products,
McHale said.

Computer Associates International recently said its goal was to reach an
equal ratio of indirect and direct sales.

IDC is owned by International Data Group, the parent company of IDG News
Service.

IDC can be reached via the Web at http://www.idc.com <http://www.idc.com/>
.

Luke Flemmer
VP Strategic Ventures
nano
phone: (212) 402-7870
fax:      (212) 430-6374
www.nano.com <http://www.nano.com/> 