ASPs, ISPs, and eMarketplaces will form alternative eChannels to boost online sales in Western Europe, IDC says

PARIS – DECEMBER 13, 2000 – 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 $4.8 billion 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 $67.4 billion, 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 emarkets," 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, emarkets 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 emarkets 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.

"The development of the Internet has generated a myriad of intermediary players all scrabbling for new business opportunities," Pearce said. "These include pure Internet service providers as well as ISVs, VARs, integrators, and consultants developing and/or selling Web-centric solutions. Initially, most IT vendors considered Web-centric companies as potential customers for their server and ecommerce offerings. Now they are rushing to integrate them into their distribution models to really get to grips with the SMB market. This means developing appropriate certification and partner support programs and, above all, backing on the right horses as mergers and acquisitions accelerate."

Online Sales and Alternative eChannels in Western Europe — 1999-2004 (IDC #D03G) reviews online sales by IT vendors and the indirect channels and forecasts their growth in the 16 countries of Western Europe. The report explores the potential role of Web-centric companies such as ASPs, ISPs, and emarketplaces as alternative distribution channels. Finally, it examines the online sales strategies of 10 IT vendors and the Web stores and eprocurement facilities that they have set up or plan to deploy. This report is available to purchase from your local IDC office.

About IDC

IDC is the foremost global market intelligence and advisory firm helping clients gain insight into technology and ebusiness trends to develop sound business strategies. Using a combination of rigorous primary research, in-depth analysis, and client interaction, IDC forecasts worldwide markets and trends to deliver dependable service and client advice. More than 700 analysts in 43 countries provide global research with local content. IDC's customers comprise the world's leading IT suppliers, IT organizations, ebusiness companies, and the financial community. Additional information can be found at emea.idc.com.

IDC is a division of IDG, the world's leading IT media, research and exposition company.