Australia’s IT distributors had a pleasant surprise when returning to work: a strong sales pipeline.
With an ever-strengthening Australian dollar trading at close to $US0.80c, and the latest Australian Bureau of Statistics research revealing that the prices of IT and audio-visual goods have dropped by an average of 5.5 per cent during the last quarter, distributors are unlikely to feel optimistic.
But while terms of trade are deteriorating, sales are not.
There is a shared sense of optimism being expressed by both broad-based disties targeting the SMB market as well as those working in the enterprise space.
“The year has started off very well,” managing director of Ingram Micro, Steve Rust, said. “We are a lot busier than in January last year. It’s like Australia went back on the job a lot earlier.”
General manager of Express Online, David Gage, said that traditionally there was nobody around during the first two weeks of January.
“This year, those two weeks were strong,” he said. “I can’t say I can put my finger on why. It could be a stock refresh, it could be a sign we are turning the corner.”
Several vendors and distributors expected some strong sales in January due to the usual back-to-school push from the education market, but many have found that the spending has been significantly broader.
GfK Marketing research director, Chris Herbert, said anecdotal evidence suggested the PC sector was relatively flat over the Christmas period, while the first few weeks of January were uncharacteristically strong.
“This suggests that consumers are becoming more savvy about January sales,” Herbert said.
Even more surprising was the renewed enthusiasm of resellers in the enterprise space.
Director of networking distributor Lan Systems, Nick Verykios, said that strong sales had continued since mid-December through to January.
General manager of enterprise products distributor Alstom IT, Greg Newham, said the company had a particularly strong January.
“We have had a terrific January,” he said. “We have had success across our entire range. It is like the brakes have come off spending and a lot of those projects that had been on the backburner are getting approved.”
The loosening of IT budgets for project work is also proving a bonus for larger resellers.
Chief executive officer of ASX-listed reseller Data#3, John Grant, said that the company was performing ahead of plan.
“It’s been busy from early on in January,” he said. “Surprisingly, even Government business [has picked up],” he said.
A large number of Government tenders were released in late 2003, many of which have flowed through into January.
ASI Solutions director Maree Lowe said that it was this overflow of project-orientated work from December that was inflating the January figures on the books of distributors.
“It has not been a big spike in January, it’s been a big six months full-stop,” she said. “We expect that project-related sales will strengthen over the next 12 months.”
GfK had been predicting for some time that 2004 would be a strong year for corporate sales in the channel, Herbert said.
“Past research has exposed to us that different segments of the market are on different sales cycles,” he said.
“In the consumer space, the cycle has shortened to two years. The small business market is steady at three years. But the corporate and Government markets have extended out to four years.
“The way we see it — 2004 has to be a big year for corporate resellers — those companies are going to have to start replenishing, as some of their machines are over four years old.”
While not everybody agrees on why the books are looking so good, all are expressing an enthusiasm unheard of in recent years.
“It all bodes well for a good year ahead,” Newham said.