Tech Data Canada

When I wrote yesterday about some of Tech DataCanada’s new marketing and organizational initiatives for 2010, there wasn’tspace to include the distributor’s outlook on the Canadian IT market going intoa New Year that many in the channel are certainly hoping will be better thanthe last.

Parent-company Tech Data reported its Q3 financialresults earlier this week, and they do show some cautious reasons for optimism.The distributor posted sales of US$5.6 billion, down 8.1 per cent year over yearbut lower than the 14 per cent decline reported in Q2. Operating profit rose by12 per cent to US$66 million thanks to cost-cuttings and improved operating margins.The results beat earlier forecasts.

Greg Myers, vice-president, marketing for Tech DataCanada (NASDAQ: TECD), told me there’s a general feeling, both at Tech Data and amongst thevendors that participated in the vendor summit, that the demand curve isbeginning to recover.

“There’s clearly an indication that commercialdemand is beginning to recover. It’s also safe to say that, historically,recovery begins in the U.S. and we see it following in Canada by one or twoquarters,” said Myers. “We’re cautiously optimistic the worse is behind us, andwe can begin to anticipate a slow but steady recovery in demand.”

That sounds about right. In these cyclicaldownturns and upturns the Canadian market never falls as far as our U.S.cousins during the downturn, so we can’t expect the swing-back to be asdramatic here either. Still, we do need the U.S. to recover for our own economyto be strong, so the U.S. coming back is good news.

Looking at the industry segments where Tech Dataand its vendor partners are seeing strength, Myers said demand for securitysoftware has remained steady. Virtualization is another strong segment,evidenced by the reorganization of the distributor’s server and storage business.And more broadly, he said software has shown resilience, as opposed to weaknessin hardware.

Finally, Myers said they’re seeing particularlystrong demand for Windows 7 that has surprised everyone, perhaps evenMicrosoft.

“We’ve seen a big take-up for Windows 7,particularly in the IEM marketplace with the system builders, but we’re alsostarting to see increased demand in the licensing space,” said Myers. “I thinkwe’ll recognize Windows 7 as one of the catalysts for the recovery in the market.We really did need a new OS.”

It’s good that Windows 7 will get to have its dayin the sun. I suspect the Windows 8 hype will begin all too soon…

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Jim Love, Chief Content Officer, IT World Canada
Jeff Jedras
Jeff Jedras
As an assistant editor at IT World Canada, Jeff Jedras contributes primarily to CDN and, covering the reseller channel and the small and medium-sized business space.

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