The Internet, Microsoft’s Online Sales Strategy, and Linux Will Shake up the Channel, IDC Says

FRAMINGHAM, Mass., April 19, 1999 — International Data Corporation (IDC) has identified several major trends that will impact software vendors' channel plans over the next year and longer. These trends include the Internet, partner portfolios, value-added distribution, Microsoft's online software sales strategy, Linux, and "marketing wedges."

"These issues are important on their own and because they should allow vendors to consider important questions about how they plan to manage and evolve their channel and alliance strategies," said Steve McHale, a senior analyst with IDC's Software Channel and Alliance Strategies research program. "Ideally, vendors should look at each of these issues squarely and assess how they will address each and why."

The Internet

The Internet is generating millions and even billions of dollars of revenue for some companies via e-commerce, which has led many others to turn to the Internet in hope of the same results. "With all the big money being thrown around, it's easy to believe the Internet is the answer, but it isn't. It's the question," McHale warned. "If companies don't understand the myriad ways their products currently reach end users, the Internet has the potential to be very disruptive."

Still, IDC believes the Internet is an important channel that provides a competitive advantage when it is used effectively. IDC says companies thinking about formulating a strategy around the Internet need to consider whether e-commerce will help them reach new customers and whether it will help them better serve their current customers.

Microsoft's Online Sales Strategy

The Shop Microsoft Web site is now live, and IDC believes it could be the most important Internet channel launch of 1999. According to IDC, Microsoft's online sales strategy will set or significantly influence acceptable parameters for channel partners and customers regarding the online sale and distribution of software.

Linux

IDC believes Linux presents a near-term challenge for software vendors who need to determine an appropriate level of investment in Linux as a tools, partner, and application platform. "Linux matters because it is a fast-growing operating system that addresses key issues of network interoperability," said Stephen Graham, vice president of IDC's Software Channel and Alliance Strategies group. "At some point, it will probably be relevant to the strategies of most major vendors."

Other Trends

Other trends affecting software vendors' channel strategies include partner portfolios and value-added distribution. Additionally, the research explores "marketing wedges," the market-defining spending patterns that can help vendors position their offerings most efficiently within the target market and within their own partner networks.

IDC's bulletin Channel Imperatives 1999: A Guide to Key Partnering Issues (IDC #B18781) thoroughly discusses each of the trends impacting software vendors' channel strategies. To order a copy, contact Cheryl Toffel at 1-800-343-4952, ext. 4389 or at ctoffel@idc.com.

About IDC

International Data Corporation is the information technology industry's most comprehensive resource on worldwide IT markets, trends, products, vendors, and geographies. IDC provides data, analysis, and advisory services to the world's leading IT suppliers as well as IS professionals in finance, insurance, entertainment, advertising, consumer goods, and publishing. IDC's research and opinions are based on the results of more than 300,000 end-user surveys, in-depth competitive analysis, broad technology coverage, and strategic analysis. IDC is committed to providing global research with local content through its 500 analysts in more than 40 countries worldwide. Additional information on IDC can be found on its Web site at http://www.idc.com.

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

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