According to a recent report from IDC, online sales of IT products and services over the Internet will leap sharply between now and 2004, with the predominance of vendor direct sales and PC hardware waning while new forms of software distribution and use boom. Furthermore, online sales by indirect channel partners will overtake those of IT vendors selling directly via the Internet.
IDC expects online sales of IT hardware, software and services to end users will amount to $4.8bn this year, or less than 1.7% of total IT spending in Western Europe. By 2004, however, this amount will have increased fourteen-fold to $67.4bn, or 15.9% of total IT spending.
“Web-enabled sales will explode as businesses and consumers seek the convenience of placing orders via web stores, extranets, and e-markets,” said Brian Pearce, research manager with IDC’s European Distribution Channels program. During this period, IDC foresees IT vendors’ share of online business to fall from 77% to 43%. Their indirect channel partners will overtake them sometime in 2003.
“Until now, online sales have been strongly associated with vendor direct sales and PC hardware. The near future will see online sales breaking with the past as IT resellers push more of their business online and as software editors, application VARs, and ASPs shift to electronic software distribution and application rental,” Pearce said. In parallel with this, e-markets and services-focused Internet companies will play a growing role in IT distribution through reselling, solutions hosting, and referral.
IDC estimates that ISPs, ASPs, and e-markets have the potential as IT distribution channels to account for almost 2.6% of total IT spending in 2004.
While this proportion may seem modest, it represents almost 30% of the online sales forecast for indirect channel partners overall. ISPs in particular will constitute an important IT distribution channel by reselling and acting as an agent for IT vendors.