The dollar up/dollar down game is a bit confusing for me. Over the last few years, every time our national currency appreciated or depreciated in value, the channel barely batted a lid. Yet on the analytically-inclined side of town, doomsayers and channel Anthony Robins-ites alike scream attention, tolling their respective bells like there is no tomorrow. “Channel tries to stay calm as dollar plummets” read one headline a few years back claiming the (mostly) US vendors couldn’t afford to price themselves out of the market offsetting our (at the time rapidly) declining purchasing power. If nothing else, local disties certainly had a lot to write home about. They are the main importers and IT product was getting very expensive.
Now that the dollar is — in the imaginative words of Sandra Sully — surging again, the story again follows a familiar plot line. Given that the product is getting cheaper and margins remain wafer-thin, an industry pundit in the know writes to me that more consolidation is likely to follow. Simply, there’s not enough volume in the channel to sustain the decline in revenues.
Now, if I were a channel economist, which I am not, I would start tearing my hair out at the very mention of currency fluctuation. And scream for the government to stop playing with floats outside of the Mardi Gras season. (OK, I had to say this just for the fun of it.) More seriously, as a body of businesses highly dependant on the relationship between Aussie mint and the greenback, shouldn’t the channel have developed strategies to deal with the rise and fall in value of the local currency, instead of screaming blue murder when those fluctuations occur?
In layman’s terms, there are a few simple truths about the channel economy: the demand for IT product is down and volumes are declining — regardless of how expensive or cheap the imports are. The real problem lies in the relatively frozen state of the IT market, and in the lack of value-based, rather than volume-based, revenue strategies. The dollar is just a supporting act. Do you agree?