By all reports, the first quarter of 2002 has finished on a far rosier note than the corresponding period last year.
The first three months of 2001 were a disaster for the channel and came after one of the worst Christmases in memory for the industry. A quick glance at some of ARN's headlines from January, February and March a year ago reveals an ugly picture.
Hypertec was under a cloud as its parent company collapsed. Intelligent Technologies failed the test of channel relevance and went under. Sealcorp took a clubbing and disappeared. Siltek plunged into turmoil. ASX-listed Iocom concluded it could no longer carry its MUA distribution arm and closed it down.
To top it all off, International Software Warehouse closed down and the Federal Government announced that the nation's GDP was in decline. The country was in the midst of a recession, which nobody wanted to admit we were having.
Meanwhile, big guns IBM and Microsoft both made moves to get closer to customers without the help of partners, with the launch of aggressive Web sales and a consulting partnership, respectively.
Price wars and stock shortages aside, everything has been much smoother so far this year. There have been some further staff cuts and a failed company or two but nothing on the scale of what we saw in 2001. That has to be good news.
As the quarter draws to a close, there is a definite air of confidence amongst the main players that things are getting better and that later in the year the recovery will be complete. Yet the extent to which this is based on true market intelligence as opposed to hope and prayer will become clearer as the year progresses.
The end of March is a crucial milestone in the calendar year. Numbers for the first quarter of the 2002 are now being tallied and patterns for this year will start to emerge.
The distribution tier of the channel, in particular, is one which will be interesting to watch and I would love to be a parrot on the shoulder of the big ships' helmsmen as they compare revenues to expenses and etch the bottom line into the ledger.
Has Tech Pacific's aggressive grab at the market through price-cutting, free freight and in-stock guarantees brought the sales result Kerry Baillie was looking for? Has the once-fat distributor trimmed costs enough to cover the margin slashing that has been taking place?
Has Ingram Micro continued to reel in its main rival? Or has Tech Pacific clawed back the ground it lost last year when it introduced its now-abolished minimum order fees?
Will the Synnex success story continue? How high is Express Data flying? Has LAN Systems decreased its dependency on Cisco? Or Digiland's on HP?
So many questions. Such secretive answers.
The end of every quarter is a telling time for businesses in the channel. With most vendor incentive and/or rebate programs built within quarterly time barriers, the rush is on to make targets.
As this week's page one story indicates, there are plenty of fun and games that take place at quarter's end as distributors scramble to buy up stock to meet their rebate targets. The small percentage that vendors will pay back to these distributors has become crucial to helping cover the low margins they are selling at.
It is no coincidence that Tech Pacific was able to guarantee it had 200 of its most popular products in stock towards the end of Q1. It had probably bought up big itself to make its rebate targets with the vendors concerned. Selling at margins as low as 1 per cent on some brands, as has been mooted, means Tech Pacific needed the rebates to help cover costs.
One down three to go. Tell me how your first-quarter ledger stacked up.
Gerard Norsa is the editor of ARN. Reach him at firstname.lastname@example.org