The risk of channel bankruptcies could “increase dramatically”, an analyst has warned as he flagged up a steep fall in profits in the sector.
Some 56% of channel partners surveyed by Omdia said they expect their profits to fall double digits in Q1.
In a LinkedIn post, Omdia Chief Analyst Alastair Edwards put this down to “intensifying geopolitical volatility, rampant hardware price rises and worsening supply constraints”.
Moves by top hardware vendors to begin reserving the right to raise prices post-PO have left partners carrying a greater level of risk, Edwards said.
“Those tied into contractual pricing agreements with customers face a potential disaster,” he wrote.
“Conflict in the Middle East threatens to intensify the crisis, with oil prices surging and supply chains disrupted,” he added.
2025 saw a spike in large and established channel players hitting the wall or restructuring, culminating in Exertis UK announcing plans to shed over 1,000 of its 1,200 staff at the end of the year.
Channel services provider Agilitas and MSSP Adarma (see here and here) were among the big-name victims.
But Edwards warned that 2026 could see an even greater volume of casualties.
“Distributor profits will come under greater pressure, particularly if delivery & logistics costs rise sharply,” he wrote.
“If conditions continue to deteriorate, the risk of channel bankruptcies is set to increase dramatically.”
“The technology industry faces a reckoning”
HPE’s CEO earlier this week indicated that demand is not an issue among its customers, claiming “not one” of the European customers he’d spoken to said they don’t want new kit because it’s now too expensive.
Intensifying shortages will be a major headache for the industry, Edwards claimed, however.
“Profit challenges in the channel are highly likely to worsen in the coming quarters. With shortages persisting (if not worsening) for 12 months or longer, the technology industry faces a reckoning,” he wrote.
“Better collaboration between vendors, partners and distributors – and a greater willingness to share financial risk – is needed across the ecosystem.”
