The Print Channel Shows Cautious Optimism Amid its Drive to Diversify for Long-term Success

June 13, 2024
Articles

Quocirca’s State of the Channel Survey 2024 reveals key growth opportunities, challenges, and concerns

The majority (65%) of channel companies in the global print industry expect revenues to rise in the coming year, with an average predicted increase of 7%, according to Quocirca’s annual State of the Channel study*. While 70% expect print volumes to continue falling – by an average of 6.25% this year – the channel sees opportunities in strong customer interest across a range of areas from cloud solutions and services to automation and sustainability.

Diversifying into new business areas is identified as a top challenge by almost half (48%) of respondents, but there is evidence that the channel is successfully making the shift to a broader IT services market, with respondents reporting that an average of 19% of channel revenues now come from IT services.

The study also found that the industry is rapidly incorporating AI into its internal business processes, with almost half (46%) of respondents saying it is already critically, or very, important to their business. The top use cases for AI in the channel are analysing customer data, creating marketing materials, and predicting problems.

After a period of major upheaval, the results of the study indicate that the channel is entering a more stable and confident phase where it can focus on building a foundation for long-term success. Quocirca believes that this foundation must include a shift to consultancy-based services that drive ongoing revenue and deliver sustained customer value. However, achieving this transition remains a key concern.

As one European ISV respondent taking part in the survey noted: “‘The [majority] of small/medium dealers have yet to find a sustainable alternative to click revenue, and bravery will be required from many who have not yet taken diversification seriously.”

Channel businesses want vendor help to close the sustainability data gap

Those who are looking holistically at how customer demand is shifting have noted the opportunity around providing sustainable products and services. Two thirds of respondents say customers show strong or moderate interest in sustainable products and services, and almost half (49%) say their sustainability initiatives are driven by the need to meet customer expectations. However, 43% say they need more information from vendors on product lifecycle impact and 33% want advice on ways to help customers save energy across their print fleet.

Alongside the strong interest in sustainable solutions, channel partners see business process automation, cloud print services, and print security solutions as the most important services to offer in the coming year.

Transforming business models is a key concern and market movement is on the horizon

Thirty-eight percent of respondents say changing business models from transactional to consultative is the biggest challenge they face, yet this will be critical as customers seek more flexible product and service provisions that can support an agile business.

One route to business transformation is through mergers and//or acquisitions. Almost one-third of respondents (31%) said that mergers, acquisitions, or divestments were on the horizon in the next three years, while the further 29% who preferred not to answer this question implies that we will see increasing M&A activity.

Many vendors and channel partners need to access new and diverse technologies, skills, and specialisms to capitalise on opportunities in rapidly expanding areas like AI, cybersecurity and cloud computing. While the largest vendors have the resources to develop propositions in-house, strategic partnerships or acquisitions are the logical route to take for most in the channel.

Vendor support is imperative during channel transition

The study found that channel partners want more support from vendors as they seek to diversify. There is a perception among the channel that OEMs are still wedded to device sales, despite the business model changes undertaken by many vendors in recent years.

As the channel continues to navigate market transformation and build consultative, collaborative relationships with customers, vendor support will be critical. This is especially true where sustainability is concerned. Partners seek more information about device lifecycle impacts, help developing energy-saving strategies for customers, and sustainability-focused deal support.

Quocirca’s State of the Channel 2024 study includes detailed analysis of predicted growth areas, challenges, and opportunities. Download a complimentary executive summary here.