Memory shortage moves price risk down the channel to smaller resellers

The memory shortage has not yet fully shown up in PC prices in European distribution. It has shown up in how the channel buys. Notebook revenues in European distribution rose 10% and desktop revenues 18% in the first 10 weeks of 2026, according to data published by Context on 23 March. The market intelligence firm puts much of that down to refresh demand and “a wave of forward purchasing by the channel”.

“Partners are actively buying ahead to secure 2025 price structures, knowing that this window is closing fast,” said Marie-Christine Pygott, senior analyst at Context. Memory prices in key European markets have risen to as much as three to four times their level in the third quarter of 2025, the firm says. Distributor stock bought at 2025 costs is holding average selling prices down for now, but Context expects that buffer to run out toward the end of the second quarter and into the third.

For resellers and managed service providers (MSPs) selling hardware to small and mid-sized customers, the question is who carries the price risk once that stock is gone. The evidence from March suggests that more of it is moving down the chain, the biggest partners expect to cope and the smaller ones in the middle have the least room.

Vendors are shortening the promise

Context says vendors are relying less on list price rises alone and more on cutting promotions, tightening discounts and shortening quote validity. Two of the largest hardware vendors have moved that way with partners. As first reported by IT Channel Oxygen, Cisco told partners in an email on 7 March that quote price protection would fall to seven days for compute hardware and 14 days for non-compute hardware from 8 March. That followed a February message in which Cisco opened the door to price rises and cancellations after a purchase order on compute orders, up to 45 days before shipment.

HPE informed partners on 5 February that it had changed its terms to allow price adjustments up to the day of shipment, the same publication reported. On HPE’s first-quarter earnings call in March, chief executive Antonio Neri said dynamic random-access memory (DRAM) and NAND flash storage now make up over half the bill of materials cost of a traditional server, and likened the policy to a surcharge passed on transparently.

For a partner, a seven-day quote window collides with how small and mid-sized customers buy. Approvals from a finance director or a board can take longer than a week, and frameworks and fixed-price service contracts are often written on the assumption that a quoted price would hold.

Scale is the buffer

Softcat, the London-listed IT reseller, has so far been helped by the disruption. Its half-year results on 18 March showed gross invoiced income up 33.3% to £2.01bn and gross profit up 22.6% to £269.9m for the six months to 31 January. Underlying operating profit rose 27.3% to £93.8m, ahead of the board’s expectations, helped in part by “pull forward of some customer orders due to memory shortages”. Softcat raised its full-year guidance to high single-digit growth in underlying operating profit, up from low single digits.

The company is careful about what comes next. It says the net impact of the shortages in the second half “remains uncertain” and that “uncertainty about how the component shortages will impact lead times and pricing over the next 12-18 months persists”. Its going concern review lists component pricing and availability as the first of three principal short-term challenges, alongside competition and a higher risk of credit losses.

Graham Charlton, Softcat’s chief executive, told IT Channel Oxygen that as the biggest UK player it expects priority from distributors and vendors, and that it cannot give customers price certainty when vendors do not give it to Softcat. He added that some frameworks will need workarounds. Softcat has a £206m net cash position and a new, undrawn £50m revolving credit facility. Many smaller resellers may have neither.

The squeeze lands on the middle

Profit pressure across the channel is already visible. Some 56% of channel partners surveyed by Omdia expected their profits to fall by double digits in the first quarter, as reported by IT Channel Oxygen. Omdia chief analyst Alastair Edwards warned on LinkedIn that if conditions keep deteriorating, “the risk of channel bankruptcies is set to increase dramatically”. Partners tied to fixed contractual prices with customers are the most exposed, he argued.

Forward buying brings its own cost. Rob Quickenden, CTO of Cisco and Microsoft partner Cisilion, told the same publication he expects more customers to ask Cisilion to order kit now and hold it for later delivery, which means paying for the stock without being able to recognize the revenue until it ships. That is manageable on Softcat’s balance sheet. For a regional reseller or an MSP that bundles laptops into a per-user monthly fee, it ties up cash that may not be there.

Context’s numbers point the same way. It found the UK flat year on year, against a stronger comparison period in 2025, while France grew on aggressive stock-building. And it warns that IT buyers face tighter budgets, with the same spend now buying significantly fewer devices than six months earlier. “The real test will come when supply tightens and pricing fully catches up with the reality of the component market,” said Pygott.

Smaller partners should rewrite terms now

The window Context describes is the time to rewrite terms, not to stockpile. Partners should match their own quote validity to the shortest vendor window they rely on, and say so on every quote. Customer contracts that bundle hardware into fixed monthly service fees need a price variation clause for devices, or the hardware should be separated from the service so that a memory-driven price rise does not come out of managed services margin. Any hold-and-store request should come with a deposit or staged payment that covers the stock.

Partners also need to have the conversation early. Cisco’s own message to partners was that every major vendor is raising prices. Customers who hear that from their supplier before the second-half reset are likelier to accept it than those who hear it on an invoice. Softcat can afford to absorb a mismatch while it sorts out its contracts. Smaller partners cannot, and should move the risk to where the price is set before the inventory buffer runs out.