COVID’s impact on the Channel in Canada: The Good, the Bad, and the Ugly

A study commissioned by Intel specifically in Canada found that most channel partners have suffered from the pandemic. There was a fair amount of optimism for the year ahead however, although many partners said they need help to realize emerging opportunities in the cloud, IoT and AI.

Intel has released a report that it commissioned examining the impact of COVID-19 on its Canadian channel partners. While some sectors of the solution provider community certainly benefited from the pandemic’s effects, the overall numbers from Intel’s partner base were fairly grim. On the other hand, there was relentless optimism about bounceback potential in the traditional PC and server market in 2021. Expected opportunities for the year ahead varied wildly by sector, which will come as no surprise. Almost half of the partners polled plan to expand into new products, services or technologies to prepare for future growth.

The study surveyed 207 Intel partners in Canada, and was prepared by Blue Research on behalf of Intel.

“It was a tough year,” said Hugues Morin, Intel’s America Sales Director. “It is still challenging for those of us working in the IT industry, but we are seeing the light at the end of the tunnel. The digital transformation opportunities that lie in front of us with these new technologies are really exciting, and I am amazed every day with the dynamism of the opportunities and the richness of the opportunities.”

Those rich opportunities were not there in 2020, however. The survey found that the pandemic had a strong negative effect on Canadian solution providers. 55% of the Intel partners said that it resulted in a decrease in revenue. Worse still, that decrease was significant, with 33% being the average drop. 12% said the drop was between 50 and 75%, and 10% said it was over 75%. Only 15% of partners said that the pandemic had increased their business, with the average amount being by 24%. 30% said that it stayed about the same.

“Those numbers are not good, but they are also a testament to how diverse the channel is in Canada,” Morin said. “I expected the market to suffer much more.”

Asked to project 2021 business, over half of the survey respondents said that they expect the pandemic to increase business in security (53%) and healthcare (51%). The two big losers because of the pandemic in 2021 are expected to be two sectors hard hit in 2020, retail (52%) and service industries (50%). Most of the sectors were fairly balanced, with numbers expecting decreases coming in between the mid 20s and mid 40s, and similar numbers expecting increases.

Curiously, given that VDI providers have done very well in the pandemic, 87% of the Intel partners expect the PC market, including desktops, notebooks, and servers, to continue to do well for the foreseeable future. Morin thinks the optimism makes sense considering the specific demands in Work From Home environments.

“I think that what you are seeing there is confirmation that the PC will continue to be the central device,” Morin said. “Multiple users at home working require a modern performance device. Even using VDI, you need horsepower to have different screens. Before, you might have had one PC that was shared. Now you need more density. Before, a machine that gave okay performance might have been good enough, but now it’s not. Particularly, for collaboration, a modern efficient device is necessary.”

Also looking ahead, 44% of respondents said that they are looking to expand the company’s expertise , products or technologies to prepare for growth after the pandemic.  Three growth opportunities in particular stood out. 92% were bullish on cloud solutions, particularly hybrid cloud. 88% see strong opportunities in IoT, 86% said that spending in AI will grow significantly and create new opportunities. Half of the partners (53%) were already in the cloud market to some degree although the numbers already in IoT (26%) and AI (20%) were much lower. Those who were not already in these markets said that they would need considerable help to get there, through technical knowledge, business knowledge, driving demand, or having the right partners in the case of complex solutions where they could do only one part of the puzzle.

“It’s obvious those are huge opportunities of growth, but these are complex and fragmented markets,” Morin said. “They state clearly that they need support around knowledge, training, and some matchmaking to help them deliver a complete solution to the end user. The high percentage of those who need help doesn’t surprise me, because they are complex and fragmented areas of expertise. For example, you might be a video expert or an access control expert who needs help with integration to the data centre for end-to-end solutions.”

Morin said that Intel is in a position to offer partners this kind of aid. The survey already scored them highly for the technical, sales and matchmaking benefits they provide. And Morin emphasized that the revamped Intel Partner Alliance [IPA], which went live early this year, is designed to provide this kind of assistance.

“These clear statements that they need support around knowledge is confirmation that the complete revamp of our channel program is headed in the right direction,” he noted. “The program allows them to be smarter about these solutions. Partners are really excited about this new capability in IPA.”