Technology is not as profitable as it once was. In 2013, the technology sector lost its crown as the most profitable industry segment to the financial services industry, which rebounded from the 2008 crash and recession. Despite a few technology vendors reporting record profits, most feel profit pressure as market prices decrease.
The channel often defies general economic downturns and margin pressures because solution providers lead the vendors in the adoption of managed services – the technology and business model that draws revenue through operational expenses. Managed services has the advantage of recurring revenue with fixed costs that make profits more predictable, and it has buoyed solution providers through the dark days of the recession, countering the declines in hardware and software profitability.
Unfortunately, managed services cannot defy gravity forever: Profitability plunged in 2013, as pricing pressures and costs crimped solution providers’ ability to wring out high profits.
The 2014 Channel Profitability Report reviews the channel profit trends of 2013 and the past four years; the profitability of individual product segments; and what solution providers must do to maintain and expand profitability.
This report examines profitability in the channel across various product and service segments, including:
- Managed Services
- Professional Services