Every year, for as long as I can remember, one of the highlights of attending COMDEX was seeing my friend Bob DeMarzo, VARBusiness V.P. Editorial Director, present the latest findings of the State of the Market research project. Well, although COMDEX has retired (at least for now) the folks at CMP Media have, again, been hard at work interviewing over 1,000 Solution Providers in North America to analyze seller and buyer sentiment and, with great care, make a few predictions for the coming year.

According to the "Key Findings" (95K) — which are posted on the Core Strategies website — solution providers agree that 2005 will be fruitful. As the two charts to the left demonstrate, small, midsize and large VARs, expect their revenues to increase over 2004. And, with increases ranging from 19% for small VARs to 32% for large VARs, the technology refresh predicted for 2004 many finally be on tap for 2005.

As we might expect, Solution Providers are finding the most incremental revenue opportunities in Services (both Professional and Technical) and Software. Overall, nearly 90% of the VARs surveyed expect their margins to increase or stay the same — great news in a market where margins on systems and components has steadily declined.

The push for the SMB market seems to be working with of 40% of VARs reporting an increase in sales to this segment. Likewise, for government business, over 40% of revenue is coming from the state and local sector although revenue across all government sectors, including federal, were up by 30%.

No, we will not make any predictions for 2005 – been there, done that. We’ll rely on our good friends at VARBusiness to do the prognosticating. That said, we’re optimistic that the New Year will bring the turn-around in IT that we’ve all been hearing about and waiting for!

Read the entire VARBusiness State of the Market report.