IDC reports modest gains in Q1 channel 15 April, 2007 By Steve Wexler

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According to IDC's Christina Richmond, research manager, hardware channels and alliances, the most noteworthy findings for the 1Q07 survey (592 respondents) was NetApp's performance -- "really just stunning results from NetApp", and the continued strength of Dell in the channel. Other interesting results included Juniper leading in security and "Acer is ahead in PCs though their increases in channel business slowed slightly this quarter over last."

While the survey looks at the channel focus and not financial results, Richmond believes 'more business' probably represents higher sales. "Overall, this is the pulse of the channel and not necessarily indicative of market shift or market share. This is channel perception of their business in the quarter being reported on and as a comparison to previous quarter. We cannot say that a vendor is winning or losing but rather that the channel reports increases or decreases in business."

The storage hardware numbers remained fairly consistent in aggregate, but there was a significant change in the technologies involved, with partners reporting an increase in NAS business quarter-over-quarter, while DAS business dropped. On the vendor side, most NetApp partners reported increased storage hardware business, while a third of those noted an increase in business over 20%. Both Hitachi Data Systems and the StorageTek brand struggled again this quarter. IDC said Sun continues to see mixed results, as the vendor again saw a high percentage of partners reporting decreased business this quarter. Overall, however, Sun is seeing a net increase each quarter.

NetApp also turned in good results in the storage software segment, with nearly two thirds of its partners reporting increased business, many reporting an increase in excess of 20%. IBM, HDS, HP, Symantec, and Commvault also had good results in the quarter. Overall, the percentage of partners reporting increased storage software business rose by 7.5%. This was the third consecutive quarter of overall increase.

Although the server segment saw only a 2.4% jump in partners reporting increased business, this segment had the highest percentage of partners reporting increased business. Dell had the best improvement over the last quarter while Sun saw the biggest drop-off. Sun was still very competitive in the standalone Q1 results, trailing only HP in terms of increased business. IBM saw a small drop in the overall percentage of partners reporting increased business, but it did have the highest percentage of partners reporting 20%-plus increases in business.

The PC segment saw slight gains, largely spurred on by desktops. Acer turned in the best results once again although it did see a slight decline quarter over quarter. HP saw higher increased business and lowered decreased business while Toshiba had the highest percentage of partners report decreased business over 20%.

With the continued adoption of VoIP, partners in the voice segment have consistently been reporting increased business. Increased business remained constant in this quarter, but overall was second to the server segment. Cisco partners had a stellar quarter with nearly two thirds reporting increased business, and Avaya saw reports of decreased business cut in half and had the highest percentage of partners report increases over 20%. Nortel partners' increased business regressed significantly after experiencing steady gains throughout 2006.

Only a slight increase was reported in security business, with Juniper turning in the best performance -- highest increased business combined with lowest decreased business. Cisco and SonicWALL both improved on their good results from 4Q06, with Cisco doubling the percentage of partners reporting increased business. This trend wasn't repeated with Check Point Software, which had the best results last quarter but had more partners report decreased business than increased business this quarter.

The networking segment was relatively flat with Cisco, Juniper, and ProCurve seeing the best results this quarter. In aggregate, the hardcopy segment was also largely unchanged, although every vendor except Lexmark saw improvement. Brother saw the biggest improvement quarter over quarter.

For a copy of IDC's Channel Panel: 1Q07 Update (Doc #206319), contact IDC's Sales hotline at 508-988-7988 or email sales@idc.com.