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Though a few factors could temper long-term growth projections, after months of apprehension and doubt, the first half of 2021 should provide some optimism for the vendors and IT services companies that rely on distribution.

Let’s start with the positive news. In the U.S., IT distribution revenue for the first quarter of 2021 was up 1.9% from 2020, rising to 16.3% in the second quarter, despite the ongoing supply chain issues and other pandemic-related challenges. Moving beyond the anomalies of the past year, sales for the first six months of 2021 rose 8.0% over the same reporting period in 2019.

Category groups that delivered positive results in Q2 2021 on top of positive results in Q2 2020 included:

• Notebooks (+33%)
• A/V & Home Camera (+33%)
• Cloud /PaaS (+18%)
• Commercial Software (+11%)
• Tablets (+7%)
• Chips & Components (+1%)

In fact revenue grew in eleven of twenty-one technology categories since 2019, including notebooks, which skyrocketed by 62.1% during that period, and Cloud/PaaS, which rose by 49%.
Source: The NPD Group

The story in Europe is also positive. 2020 distribution sales remained relatively strong in many regions through the early days of the pandemic, and revenue increases of 11.7% in Q1 and 8.7% in Q2 of 2021 provided some uplifting news for the industry. Revenue for the first six months of 2021 was up 15.9% compared with the same period in 2019.

The final piece of good news involves each European Country Group experiencing positive revenue growth in Q2 2021, including:

• Czech Republic/Poland/Slovakia are leading in 2021 with revenue growth at +18% for Q2
• Spain +17%
• Nordics +12
• Italy +11%
• UK & Ireland +8%
• France +7%
• Germany +4%
• All Remaining Countries +7%
Source: CONTEXT

Weathering the Fears

While sales growth regained and, in many cases, exceeded pre-pandemic numbers in the first half of 2021, industry experts are naturally cautious about making future predictions. Despite lingering concerns about business revenue and economic factors related to the pandemic and more, Gartner projects a nearly 10% year-over-year increase in global IT industry sales in 2021. The research firm cites the proven ROI of technology investments in general as contributing to its encouraging outlook.

Several potential issues could temper those optimistic outlooks for the U.S. and Europe. The biggest concerns include:

• Supply chain issues continue to affect the availability of computer chips, Chromebooks, and other mobile devices.
• The recent peak in demand occurred during the traditionally strong education buying season, which may be detrimental to Q3 growth expectations.
• Expiration of federal, state, and local financial incentives could slow IT investments.
• Enterprise companies delaying or rethinking workplace plans may negatively impact IT spending.
• Continued positive trends with cloud adoption and infrastructure transformation could adversely affect hardware sales.
• Europe experienced robust sales in the second-half of 2020, which may temper growth expectations for the same period in 2021.

2020 was an anomaly for the IT industry. The reality for distributors, vendors, and channel partners is that the effects of the COVID-19 pandemic may linger for years and continue to transform how people work. While a number of question marks remain for business leaders and technology industry decision-makers, there are many great reasons for expressing optimism today.