01732 759725 30 INSIGHT Canalys predicts that by 2025, cloud marketplaces will grow to over US$45 billion, representing an 84 per cent CAGR, double its pre-pandemic forecast Canalys outlook Canalys believes that hyper-scaler marketplace momentum will place greater competitive pressure on legacy distribution. Disruptive pressures The rise of cloud marketplaces is just one of the disruptive pressures that will accelerate change within IT distribution in 2023. More vendors (particularly in cybersecurity and software) will seek to leverage hyper-scaler marketplaces – led by AWS Marketplace, Microsoft Commercial Marketplace and Google Cloud Marketplace – as a channel to market, to capitalise on procurement trends and attractive benefits offered by the hyper-scalers. The rise of this channel represents a threat to both resellers and two-tier distribution. But as more complex technologies are consumed via marketplaces, end customers are also turning to trusted partners to help them discover, procure and manage marketplace purchases. A leading force in global IT distribution By 2025, Canalys conservatively forecasts that almost a third of marketplace procurement will be done via channel partners on behalf of their end customers. As hyper-scaler cloud marketplaces take on a greater distribution role, a growing share of this revenue will be diverted away from established technology distributors. By 2025, Canalys predicts that AWS Marketplace will be a leading force in global IT distribution and a top 10 IT distributor in EMEA by revenue. This, it says will fuel greater urgency for legacy distributors to respond in their own business models, particularly as growth continues to shift away from PCs and consumer products. Infrastructure hardware growth via distribution will be bolstered by improving supply in 2023, the latent demand for infrastructure modernisation and continued inflation. Canalys says that acquisition-led consolidation will be a route to growth for larger regional and global distributors (supported by financial investments by private equity owners). Yet distributors must strengthen their value propositions to both vendors and channel to partners as the shift to SaaS, subscriptions and cloud accelerates. This can be a challenge for legacy distributors, which are constrained by established business models and financial structures. While many of the leading distributors – TD SYNNEX, Ingram Micro, Arrow, ALSO and others – have invested heavily in building their own cloud marketplaces, many of these have failed to keep pace with demands for advanced billing, integration and management. These players also remain heavily reliant on volume scale in slowing product segments, many of which are experiencing steep declines after the pandemic-led boom. They are now prioritising investments in higher growth segments, such as cybersecurity, networking, cloud and software – including through acquisition. However, in many cases, they are being outpaced in growth terms by more specialised players, such as Exclusive Networks, Computer Gross and Infinigate, which have expertise and professional services capabilities in high-growth areas, such as cybersecurity and cloud services, which allows them to differentiate from hyper-scaler marketplaces – and newer players such as Pax8, NextGen and Sherweb, which have emerged with strong online sales and automated billing engines to support second-tier partners moving to managed services and subscriptions. These players can lack the scale and channel dominance of the leading broadline distributors, but their agility, flexibility and lack of legacy constraints are allowing some to expand rapidly, attracting channel partners and new vendor partnerships. www.canalys.com In the Canalys outlook: 2023 predictions for the technology industry, the analyst house states that cloud marketplaces have moved from a future-looking trend, further accelerated by the pandemic, to a strategic and actionable route-to-market conversation with thousands of software and hardware vendors and services partners.. Developments in marketplaces as a technology route to market are accelerating at a dizzying speed. The hyper-scaler cloud marketplaces are leading this momentum. Several cloud marketplace participants, specifically security vendors, are publicly reporting as much as 600 per cent year-on-year growth via this channel, Canalys reports. In addition, the hyper-scalers are now reporting several billion-dollar customer commitments through enterprise cloud consumption credits, which cover more than just software. The large cloud marketplaces have lowered fees from upwards of 20 per cent down to 3 per cent, enabling vendors to fund multipartner offers inside the transaction. A change in buyer behaviour A change in buyer behaviour is also benefiting marketplaces where new integration-first criteria become more important than price, support or other factors. Buyers are looking to procure and provide a set of building blocks in a single spot – the average IaaS, SaaS or security deal today involves seven layers of engagement.
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