Editorial: Time to change channels?

When Sony’s president and chief operating officer, Kunitake Ando, opened the annual CeBit trade show in Germany last week, it was yet another pointer that the traditional IT distribution model is on the cusp of a metamorphosis. He became the first representative of an electronics and entertainment company to be given the honour and it seems unlikely to be a coincidence that it happened at a time when the digital home revolution is just starting to take shape.

Not surprisingly, recent discussions I had with leading local distributors about the road ahead for the IT channel reaffirmed that the direct model of Dell and reduced spending following the dotcom crash had forced everybody to operate in leaner, meaner and smarter ways. But comments made by Tech Pacific managing director, Kerry Baillie — that the IT industry now touches virtually all aspects of modern society and anybody wanting to make the most of the opportunities out there had better start embracing change — were a breath of fresh air.

And while the changes of recent years seem significant now, those starting to take shape are likely to be of far greater magnitude. The latest Canon Consumer Digital Lifestyle Index, conducted by market research outfit GfK, claimed that Australians spent more than $650 million on digital lifestyle products in the fourth quarter of 2003 — an increase of 27 per cent on the same period last year despite the fact that average prices had fallen across the board. And as the trend for IT products to converge with consumer electronics continues, more and more of these cool gadgets are going to become channel opportunities.

Of course, many resellers have built a business around particular technologies and will let this revolution pass them by without batting an eyelid. They know what they are good at and have no intention of changing their business model to jump on a gravy train. But the thousands of small resellers out there that have the flexibility to follow trends should be in no doubt that the fusion of consumer electronics with IT has the potential to change the shape of the IT channel beyond recognition.

The main message at CeBit this year was that lean times will soon be fading into the rear-view mirror as the broadband revolution heralds a new era of growth. Let’s not get this out of perspective. Such a revolution is further away in Australia than in most developed societies given the extremely low broadband penetration that has been discussed at great length in this and many other titles. But the drastic reduction in pricing recently has tipped the scales slightly and given that market the impetus it needed to start its journey along the path to maturity. My guess is that once prices reach a stable point, ISPs will turn their attentions to download limits as their main differentiator and all-you-can-eat will eventually become the norm.

As gadgets continue to get smaller and more functional, and standards promoting interoperability become more refined, a picture is emerging of a home environment where consumers can mix and match the pieces of technology they want in a network that may or may not contain notebooks, mobile phones, portable music players and storage devices, media centre PCs, digital cameras, printers and games consoles with built-in TV tuners and DVD players. In that environment there is little or no justification for the traditional desktop PC loaded with an array of capabilities that are never used. As far as the home market is concerned, the good old desktop is like Bruce Willis in The Sixth Sense — it’s dead but it just doesn’t know it yet. What do you think?

Brian Corrigan is Editor of ARN. Reach him at