The good news for distributors just keeps coming. For those of you who missed this blog back at the end of July, it focused on a report by the Global Technology Distribution Council (GTDC) entitled The Evolving Role of Distribution in Technology Go-To-Market Models. The report looked at the role of distribution in the near and longer term as it evolves from “a transactional intermediary into the operational layer of the technology ecosystem”.
According to the report, distributors were increasingly providing “the orchestration, automation, enablement, financing, marketplace operations, compliance support, analytics, and ecosystem coordination needed to execute effectively in complex, multi-vendor environments”.
It predicted the role of distribution would continue to expand over the next five years “as marketplaces mature, AI becomes embedded across channel operations, ecosystem selling accelerates, and compliance requirements grow more complex”.
Fast forward six weeks or so to be greeted by the publication of yet more good news. According to Context, the global market intelligence firm covering technology channels and distribution across EMEA, European IT distribution revenue will grow 7.5% year on year in 2026, “following stronger-than-expected performance during the first half of the year”. Not too shabby, I’m sure you’ll agree.
The company noted that growth is being led by higher-value technology categories, including enterprise and infrastructure products, rather than the high-volume categories that make up much of the broader IT market. Revenue from value-led categories increased by 14% in Q1 and 20% in Q2, while volume-led categories grew by 6% and 9% respectively.
But before we get too carried away, research director Anthony Frot felt it necessary to warn that the encouraging headline figures “do not tell the whole story”. He pointed out that much of the strength in the market “is coming from value rather than a comparable expansion in unit volumes”, urging vendors, distributors and resellers to plan for a market “where revenue can look considerably stronger than underlying demand”.
Frot predicted the direction of travel for the second half of the year was “towards slower and more normalised growth. The gap between value and volume will be one of the most important indicators to watch, particularly as businesses set budgets and inventory plans for 2027”. As a result, Context has predicted revenue growth will slow down in 2027 to 3.1% in Q1 and 2% in Q2. Still, we can comfort ourselves with the thought that even if the numbers are lower, it’s still growth.
I was intrigued however, by the phrase “where revenue can look considerably stronger than underlying demand”, so I decided to run it through my translation software (located in a space between my ears) to see what it would spit out (not literally, I hasten to add). So, let’s look at it again: “revenue can look considerably stronger than underlying demand”.
That doesn’t mean it is considerably stronger. Just that it looks like it. But why would revenue look stronger than underlying demand? Well, if revenue was up 10%, for instance but underlying demand had increased by a lower amount (5% for example), you’d have to conclude that people were paying more for goods. This is pretty much borne out by Context’s finding that growth is being led by higher value technology rather than high volume categories.
Does it matter? At this stage, if you’re doing the selling, it probably hasn’t mattered so far. After all, no one is going to complain about earning more from selling less. And concentrating the channel’s efforts on selling more high value technology has been a mission for a number of vendors for some years now.
But that doesn’t mean it won’t matter going forward. That’s why the gap between value and volume “will be one of the most important indicators to watch, particularly as businesses set budgets and inventory plans for 2027”. What we’re waiting to find out is just where the proper balance resides between value and volume going forward. Clearly, it has made a big difference to date but it would be unrealistic to continue so heavily in value’s favour as it has in 2026.
Whatever rebalancing takes place over the next year or so, it is debatable whether we will ever fully arrive at the optimum division between value and volume. The simple fact is it changes all the time, depending on demand. And demand, as we’re witnessing firsthand during the current AI frenzy, isn’t always rational.
Ltd
