Resellers optimistic for coming year

Resellers optimistic for coming year

The Australian channel is brimming with confidence according to a reseller survey carried out by ARN and office equipment finance company RentSmart.

The general outlook for the near future seems to be more than positive, with 78 per cent of survey respondents declaring "fair" or "extreme" levels of confidence in the IT industry for 1999.

More than three quarters expect an overall increase in the value of sales this year, a prediction reflected by the 40 per cent of respondents that declared an intention to employ more people in the coming year.

At the same time, 53 per cent of respondents expect a rise in general IT profitability, with small and medium enterprises expected to generate the most new business in the industry.

Peter Schimdt, managing director of system builder Genitech, claims "the uptake of technology is growing constantly. The most promising areas being communications and communication enabling tools".

Mark Harwood, managing director of reseller Sigmacom, looks forward to satisfying growing demand for multimedia products, while predicting an upsurge in Y2K-related needs, again especially for small and medium businesses.

Ned Montarello, RentSmart's managing director, agrees. "The SME sector of business is potentially the most lucrative for the retail channel," adding that "[RentSmart is] experiencing an explosion of demand for finance from this sector as small businesses begin to expand and turn to office technology suppliers to equip their operations."

Although predominantly positive, there were a few sombre tones in the survey's results. While only 10 per cent of businesses predict a decline in their sales, a further 20 per cent expect an upcoming decrease in profitability.

Resellers fear falling margins and direct tacticsWhile the overwhelming majority of resellers are viewing 1999 through rose-coloured glasses, a number of issues have resellers anxious and worried.

Having suffered shrinking margins for a while, the channel seems to have learnt to fear them, with more than 100 of 120 respondents naming falling margins as their biggest concern for 1999.

Nor would vendors going direct in 1999 win them any popularity contests amongst the participants of the survey. Almost the same number of companies also seem to be concerned about the upheaval in international exchange rates, and its effect on import prices.

A further 63 per cent are still worrying about the repercussions of the recent economic crises in Asia.

Yet, for instance Genitech's Peter Schmidt sees the biggest dangers for the Australian IT industry lurking "within the industry rather than on the international market". He adds that "The Australian IT industry is in its consolidation stage; small companies will be swallowed by bigger organisations, and bigger organisation will be absorbed by even bigger organisations, until the market reaches some stability."

On the other hand, large portions of the channel are not afraid of e-commerce, nor are they worried by increasing global and local competition, nor even by the millennium bug, which by many is seen as an opportunity rather than a threat. by ARN staffRental finance on the up and upRental finance is booming and set to grow even further, according to the survey.

More than half of the respondents already offer rental finance on equipment, and a similar number plan to increase their rental finance and leasing agreements over the next two years.

Almost one third predict rental finance and/or leasing to account for up to 39 per cent of their business finance at the end of that period. Nearly all surveyed agree that tax deductions are the most attractive aspect of rental finance, with bundling of equipment given as the second most important motivator.

The findings are not a novelty, according to RentSmart's Ned Montarello, who claims RentSmart "already has clients who rent 100 PCs in order to ensure they can keep their operations in pace with changes in technology". by ARN staffTaxing concernsResellers are increasingly moving to a service model as this graph shows.

In related findings, services may be more expensive under a GST, but more than half of resellers still predicted that the GST would have a positive effect on their business.

Negative outcomes for their business are expected by 35 per cent of respondents, with 11 per cent forecasting no significant changes associated with the GST. More than 100 of 120 respondents claim to have satisfied the new sales tax law.

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