1. Expert analysis for the high-tech industry A brighter future for Europe’s IT channel Alastair Edwards, Senior Analyst – Canalys Presentation and channel panel www.canalys.com/belgium Username: heysel Password: channel06 Available until: 30 th June 2004

2. Return to a fast-growth industry Canalys Titans Index Source: latest reported fiscal results for Cisco, Dell, EMC, HP, IBM, Lexmark, Microsoft, Oracle, Sun © canalys.com ltd. Share price growth Net income growth Net revenue growth Year-on-year growth rates

3. Positive trend maintained How well do you think your business has performed compared with the same quarter one year ago? Western Europe © canalys.com ltd. Source: Canalys Channel Panels, Q4 2002 to Q1 2004 (85–129 respondents) Percentage of respondents

4. Notebooks and security fuel the channel © canalys.com ltd. Source: Canalys Channel Panel, March 2004 (45–94 respondents) Which of the following product categories are selling above your expectations?

5. Security is helping the channel grow For the following categories, are sales above, in line with or below expectations in Q1? © canalys.com ltd. Source: Canalys Channel Panel, March 2004 (86–94 respondents) Percentage of respondents

6. Tablets are still a harder sell © canalys.com ltd. Source: Canalys Channel Panel, March 2004 (68–93 respondents) For the following categories, are sales above, in line with or below expectations in Q1? Percentage of respondents

7. Wireless is just ahead © canalys.com ltd. Source: Canalys Channel Panel, March 2004 (45–80 respondents) For the following categories, are sales above, in line with or below expectations in Q1? Percentage of respondents

8. The message to resellers is clear Investment priorities Security Wireless Mobility Expertise Headcount Mid-market sweetspot Applications/solutions Compensation structures Expansion Business priorities First with new technology Non-traditional markets Aggressive not cautious Retain key staff Move fast Primary customer contact Stay ahead of vendors Upselling (options) Market coverage © canalys.com ltd. We are back in a growth market! Failure to act will see opportunities pass you by!

9. People Training, accreditation, vendor and industry specialisation Systems Web tools, procurement, warehouse, multi-vendor Resellers – invest in people or systems LowMediumHigh Volumes and revenue Contribution and margin © canalys.com ltd. Reduced, or no, business dependency on hardware Partnerships Reduced, or no, technical competence Low Medium High

10. Global Multi-national Government Enterprise Mid-market Enterprise selling models to converge Channel coercionChannel consensual © canalys.com ltd. Collaboration Corporate resellerDirect DellHP

11. SMB Direct model success is over-hyped © canalys.com ltd. Storage = = Networking = = = = EMEA 2003 revenue by channel 2003, 2004 trend Desktop Server Notebook Server Storage Notebook = = Enterprise 100% direct 100% indirect

12. Many channels into the same customer © canalys.com ltd. PC industry Networking CorporateMediumSmallMicro Created by: Cisco, Nortel Notable distributors: Azlan, Westcon, Algol Notable resellers: Dimension Data, Getronics Voice Created by: Avaya, Samsung, Inter-Tel Notable distributors: Rocom, Nimans, MTV Telecom Notable resellers: Omnetica, Damovo, NextiraOne But often different buying point Notable corporate resellers: Computacenter, Dolmen, Econocom, Systemat Created by: Compaq, HP, Novell, Microsoft Notable distributors: Tech Data, Ingram

13. Defining value-added distribution Duplication of vendor and/or reseller responsibilities? Will role change during transition to industry standard computing? Will customers pay for value-add? Storage already requires more value-add than most servers Other new, complex, enterprise technologies will emerge © canalys.com ltd. Reseller recruitment Post-sales support Customer acquisition Partner management Marketing Technical integration Pre-sales assistance High-value inventory Vendor inefficiency New technologies

14. Migrating channel relationships Intense direct/indirect competition Resellers still too hardware-centric Vendors over- subsidising the channel No vendor profit in channel desktops Duplication of channel/vendor role Corporate resellers poor at SMB attack Slow technology adoption Reseller channel less dependent on hardware Collaboration on enterprise accounts Technology innovators replace order takers Enhanced mid-market/ SMB attack Application centric: ISV partnerships Service provider model: hosting, remote management, BPO Improved indirect profitability for vendors © canalys.com ltd. Migration pointsChannel conflictChannel co-operation Reduced product margin for resellers Outsourced accounts Technology/solution specialisation rewards Communication, clarity and value recognition Mid-market/ SMB incentives Focus on profitable partners

15. Resellers must choose the best route © canalys.com ltd. Getronics Telindus RedCorp Computerland Computacenter Bechtle Shopmat Alfashop Systemat Econocom Value: cost-efficient sales/marketing platform, run-rate volumes, low services Dimension Data Value: account management, fulfilment, multi-vendor accreditation T-Systems Dolmen DANGER AREA LDLC-PRO VARs Online/mail order Large account resellers Value: solution/service- focused, technology innovators: eg, in security, mobility, IPT

16. Franchises are an option for some © canalys.com ltd. Source: Canalys Channel Panel, March 2004 (103 respondents) Can you imagine a business model where resellers convert into franchises to become “HP stores” or “Microsoft shops”? “Resellers will migrate to where they can make the most money” 33% “It works in B2C but not really in B2B and is unlikely to be successful” 18% “It’s a risk if overly dependent on one vendor” 23% “It’s worth considering and an interesting idea” 26%

17. A sliding scale for resellers… Vendor agnostic Accreditations/ specialisations Full vendor franchise © canalys.com ltd. Multi-vendor/ independent Dedicated sales teams POSITIVES NEGATIVES Low vendor support Little differentiation High investment, costly to maintain High vendor/portfolio dependence Low flexibility, long-term investment risk Growing margin pressure Flexibility: supply and solutions Trusted customer advisor Technology expertise Preferred vendor partner High vendor support: leads, Ts and Cs Recognised specialist

18. …but the future of reseller channel looks secure Reseller account management role is recognised Technology innovation never stops Vendors coming back to the channel (HP, IBM, Sun) Channel commitment brings vendor benefits Direct channel still inefficient and unreliable in Europe Resellers maintain primary link to mid-market and SMB customers © canalys.com ltd. Distributors strengthen reseller channel (networks/alliances) Resellers are critical to fulfilling growth in new technology spend Vendors lack reach and understanding of SMB market Now is the time to invest: skills/training, headcount, S&M

19. Returning to the earlier message… © canalys.com ltd. Investment priorities Security Wireless Mobility Expertise Headcount Mid-market sweetspot Applications/solutions Compensation structures Expansion Business priorities First with new technology Non-traditional markets Aggressive not cautious Retain key staff Move fast Primary customer contact Stay ahead of vendors Upselling (options) Market coverage We are back in a growth market! Failure to act will see opportunities pass you by!

20. Expert analysis for the high-tech industry A brighter future for Europe’s IT channel Alastair Edwards, Senior Analyst – Canalys Presentation and channel panel www.canalys.com/belgium Username: heysel Password: channel06 Available until: 30 th June 2004