NPD Research Sees Growth in Indirect Hardware Sales

One of the more popular misconceptions these days is that the rise of cloud computing will eventually lead to the demise of the channel. While it’s true more applications than ever are running in the cloud, a new report issued today by the market research firm The NPD Group suggests the IT channel is gaining much more than it’s losing as a result.

The U.S. indirect hardware market for the business-to-business sector grew four percent, from $55 billion to $57 billion, in 2017, according to The NPD Group’s Distributor Track and Commercial Reseller Tracking Service.

That growth rate not only outpaced the annual U.S. GDP growth, but it also suggests that solution providers are benefiting from increased demand for hardware in many cases because of cloud services, rather than in spite of them, says Michael Diamond, director of industry analysis for commercial technology at The NPD Group.

For example, server sales are flat. But the NPD report finds there is increased demand for PCs and workstations, wireless networks, security appliances and a wide variety of peripherals.

“The cloud represents an opportunity for partners to stretch out their business,” says Diamond.

Diamond notes, for example, increased sales of hardware bring with it an opportunity to provide managed services that shift responsibility for managing IT away from the end customer.

Even in the data center, there are emerging opportunities. While server sales are flat, the NPD report finds demand for 10GbE and 40GbE products are growing at over 29 and 72 percent, respectively. The reason for this is more powerful servers are enabling IT organizations to employ a larger number of virtual machines and associated workloads per physical server, which in turns drives up demand for higher bandwidth. In fact, increased demand for network bandwidth will only increase as the need to connect on-premise IT environments with external cloud services continues to increase.

In total, Diamond notes there are more products and services than ever moving through the IT channel. Diamond notes distributors, in particular, don’t get enough credit for aggressively enabling channel partners to tap into emerging hardware opportunities.

The ongoing challenge facing solution providers is determining specifically where new hardware opportunities, that in one way or another, are connected to a cloud service are rapidly emerging. That requires not only more IT expertise on the part of the channel partner, but also sales enablement tools designed to drive demand for a solution rather than isolated products.