Hardware Revenue Surges Amid AI Infrastructure Demand
Steve Brazier, an Informa fellow and co-founder of Canapii, stated at the Canalys Channel Forum in Barcelona that artificial intelligence has fundamentally altered market dynamics, shifting the primary source of revenue for the IT channel toward hardware and infrastructure.
Brazier challenged the long-standing industry narrative that success depends on software and services. "For 30 years, you’ve gone to conferences, and people have told you the future of the channel is software and services," Brazier said. "They’ve been wrong for 30 years, and they continue to be wrong, because the companies making the money today are involved in hardware."
According to Brazier, the surge in demand for hardware components has directly benefited distributors and partners. He identified Computacenter, Softcat, and Atea as the standout performers in the channel, noting that they are delivering record quarters due to their involvement with AI infrastructure.
Brazier emphasized that the financial gains are tied to datacenter spending rather than the development of AI services. "The money in AI today for the channel is in building the datacenters, not in developing AI services," he said.
Price Predictions and Distributor Growth
Brazier predicted that hardware costs would rise for at least the next 12 months and likely through 2028. He advised industry participants involved in purchasing PC servers or products containing semiconductors to stock their warehouses immediately to capitalize on increasing product values.
"The cost of hardware was going up and will continue to go up for at least the next 12 months, and most likely through 2028," Brazier said. "Those of you involved in buying PC servers or any other products with semiconductors in, stock up your warehouses now. The value of those products will increase over the next 12 months. You’ll make a lot of money if your warehouses are full."
Alastair Edwards, chief analyst at Omdia, supported the view that distributors are currently the fastest-growing segment of the channel. He attributed this growth to their ability to navigate complex pricing and inventory environments while supporting hardware market demands.
Edwards noted that inventory built up within distribution networks has helped partners manage supply constraints. He added that the largest players in the channel are benefiting from major datacenter deals, while smaller participants are finding opportunities by providing specific infrastructure components.
Long-Term Risks and Market Volatility
Despite the current hardware boom, Jay McBain, chief analyst at Omdia, warned against making long-term strategic plans to shift business back into hardware. He cited significant risks including geopolitics, price inflation, supply challenges, and daily tariff threats as factors that could destabilize the market.
McBain stated that PC volumes are expected to decline next year, describing the current hardware revenue opportunity as point-in-time rather than a viable three- to five-year strategy for reselling PCs. This caution contrasts with Brazier’s immediate advice to stock up, highlighting the divergent views on the sustainability of the current hardware-driven growth.