As vendors grapple with industrywide memory and storage chip supply chain constraints that materialized late last year, partners are starting to feel the pinch of higher costs and tighter procurement windows. Geopolitical shocks have contributed to rising component prices, which inevitably flow downstream into the channel.
The situation is likely to persist, according to the latest research by Omdia, a Channel Dive sister company.
“This is going to be a challenge … until at least next year, if not longer,” Alistair Edwards, chief analyst at Omdia, told Channel Dive.
At the heart of the disruption is a sharp escalation in hardware pricing. More than 70% of partners across PCs, servers and storage report that vendors have already implemented price increases, Omdia’s latest research found. More than 90% of partners report delayed vendor fulfillment, with order cancellations and shortages frequently cited as significant issues. The firm surveyed 186 partners in March.
The situation is unprecedented, Edwards said. The scope of the problem exceeds what the industry experienced during the COVID crisis, he added.
The key driver is surging demand for AI infrastructure. Hyperscalers and AI firms are devouring vast quantities of memory and compute components, diverting supply away from traditional enterprise channels.
“OpenAI alone was locking up as much as 40% of the available memory,” Edwards said. “The big hyperscalers have similarly driven large proportions of capacity allocation.”
PCs, servers and storage hardware have been the hardest hit, while networking gear remains comparatively unscathed as of yet.
The problems have spread beyond costs. In addition to announcing price increases earlier this year, networking giant Cisco said it was revising partner contracts. In a similar action, HPE began repricing existing quotes earlier this year.
Some manufacturers have canceled orders late in the process, according to Omdia.
“Vendors are canceling orders up to the point of shipment,” said Edwards. “That has massive implications for a partner’s ability to maintain a credible relationship with the customer.”
Shrinking windows
To manage pricing uncertainty, vendors are tightening quote validity periods. More than 80% of partners report shorter quote windows, often falling below 30 days, Omdia found.
If a quote expires, pricing may need to be renegotiated, potentially eroding margins or derailing the sale entirely. For partners already operating under pressure, this adds another layer of complexity to an already challenging sales environment.
Customers, meanwhile, are responding to the volatility in different ways. Some are accelerating purchases to lock in current prices, boosting short-term channel revenues. Others are delaying investments, hoping that conditions will stabilize.
“Customers have a choice: they can either continue to order in advance … or … they’ll just stop placing orders,” said Edwards.
Even when orders go through, supply constraints can delay delivery, pushing out revenue recognition and impacting top-line performance.
“As we start to get to a point of a lack of availability … delivery times get extended … ultimately they’re impacted on their top line,” said Edwards.
The combined effect of rising costs, delayed fulfillment, and pricing uncertainty is hitting partner profitability.
“Over 50% of the channel expects their profitability to fall in double digits,” said Edwards. “It’s a very significant impact on the bottom line.”
Supply strategies
Access to inventory is becoming a key differentiator, with some distributors increasing stock holdings or placing orders further in advance to secure supply.
At the same time, alternative sourcing options are gaining traction. Refurbished hardware is expected to see increased demand, as organizations look for ways to manage rising infrastructure costs.
Shortage mitigation strategies introduce risk, particularly in an unpredictable pricing environment where holding inventory may lead to losses if prices shift.
“Massive turbulence and volatility … are driving a change in the way that customers think about their exposure to risk,” said Edwards.
The challenging environment favors closer collaboration between vendors and partners. From aligning on pricing strategies to exploring alternative solutions, such as cloud deployments or different configurations, both sides will need to work together to navigate the disruption, Edwards said
Partners, in turn, will play a critical role in helping customers make sense of a rapidly changing landscape, added Edwards.
At NetApp’s EMEA and LATAM Partner Summit in Amsterdam, which Edwards attended, the company’s SVP of EMEA Willem Hendrickx spoke to the issue. He was keen to point out that despite the current headwinds, NetApp has honored customer quotes and pricing agreements with partners.
