It's The Stupid Economy

It's hard to discuss the VARBusiness 2009 State of the Market survey without first addressing the gorilla in the room: the economy. The Web-based study fielded during November by the Institute for Partner Education & Development (IPED), analyzed responses from 350 North American solution providers weighing in on where they think the IT market is going in 2009. IPED is the research arm of Everything Channel, which also owns ChannelWeb. And the economy was top of mind, leading off our list of the 10 key takeaways.

VARs say global recession, weak consumer spending and the credit crisis all trouble them going into next year. But despite their concerns, solution providers aren't retreating or retrenching. Instead, SOM results indicate that VARs are identifying areas of opportunity and aggressively pursuing them. VARs listed the global recession, weak consumer spending and the credit crisis as their top three concerns. But waiting in the weeds are rising unemployment numbers -- the Federal Reserve late last month said the prospects for weaker economic activity will push up unemployment. The Fed projected that the national unemployment rate will rise to between 6.3 percent and 6.5 percent this year. The rate in October was 6.5 percent, and last year the rate averaged 4.6 percent. Next year, the Fed expects the jobless rate to climb to between 7.1 percent and 7.6 percent—also higher than its summer forecast.

But some solution providers see opportunities in the unemployment numbers, especially if customers trim ranks in their in-house IT support staffs.

"We are seeing the services part of our business pick up," said Don Richie, CEO of Sequel Data Systems, an Austin, Texas-based solution provider. "The bottom line is that companies that have to cut back on their infrastructure are coming to us and asking if we can provide a person two days per week to manage their data center, and pay us $200 per hour vs. paying someone's salary."