2025: The IT channel’s year in review

If 2025 had a theme tune for the IT channel, it would be the sound of partners enthusiastically unboxing “AI opportunities” while quietly checking the invoice to see who actually got paid.

Because, yes, AI dominated everything. Vendor keynotes. Distributor roadshows. Strategy decks. Every conversation that began with “we’re seeing a lot of interest in…” inevitably ended with “…AI”. But for many partners, 2025 wasn’t the year AI transformed the balance sheet, but the workload.

AI investment first, reward later (maybe)

Analyst research from IDC showed most channel partners investing in AI practices, embedding AI into services, and pursuing specialisation. High-performing partners, in particular, were already using AI to differentiate through things like vertical expertise, outcome-based delivery, and automation.

However, at the Canalys Channels Forum EMEA, Omdia analysts noted that while the AI opportunity is enormous, the rewards are uneven – and not always flowing to the channel.

As a result, 2025 became the year partners stopped asking “how do we sell AI?” and started asking “how do we survive with AI?” The answer, increasingly, was specialisation, managed services, and embedding AI into delivery rather than pitching it as a shiny standalone thing.

Partner programs: simplification, but not serenity

If AI defined partner strategy in 2025, programme change defined partner headaches.

Microsoft’s CSP updates landed with familiar force. New revenue thresholds, stricter compliance requirements, enhanced security expectations, and more scrutiny around Partner of Record (PoR) all reinforced a single message: Microsoft wants partners to own the customer lifecycle, not just transact licences.

However, many MSPs argued that licensing margins are now so thin, and competition from larger CSPs so aggressive, that the incentive to stay in the licensing game at all is questionable.

Cisco, meanwhile, went big with Cisco 360 – collapsing multiple incentive structures into a single framework designed around lifecycle value, cross-portfolio selling, and AI-ready infrastructure. The retirement of legacy designations (including Gold) signalled that sentimentality has no place in the AI era.

Microsoft and partners: “it’s complicated”

Nowhere was the strain in partner relationships more visible than in Microsoft’s dealings with MSPs.

Throughout the year, MSPs publicly criticised Microsoft for failing to protect pricing parity in the CSP ecosystem, allowing large licensing players to undercut smaller partners and then leverage those relationships to capture services revenue. The result, according to many MSPs, is a race to the bottom on licences – followed by awkward conversations about “partner-led growth”.

Microsoft insists partners remain central to its strategy. Many partners don’t dispute that. They just question whether the incentives, protections, and economics still line up with the rhetoric.

By the end of 2025, the Microsoft-partner relationship wasn’t broken – but it definitely felt like it needed couple’s therapy.

Servers are back – maybe

One of the quieter surprises of 2025 was the resurgence of hardware, driven almost entirely by AI infrastructure.

Server sales surged as hyperscalers, enterprises, and governments raced to build AI-capable data centres. GPU-accelerated systems dominated growth, and for the first time in years, “servers” felt exciting again. Almost.

So, is hardware officially back? Yes and no.

For partners, AI infrastructure has created real opportunities around design, deployment, networking, security, storage, optimisation, and managed services.

The complexity of AI environments plays directly to channel strengths. But the biggest server deals increasingly go direct. Hyperscalers and mega-buyers dominate the top end, while vendors themselves have been more willing to bypass indirect routes to market. Add rising component costs – including a notable spike in server prices – and hardware margins remain fragile.

M&A: consolidation with intent

Finally, there were the acquisitions — lots of them. Channel M&A accelerated throughout 2025, particularly among MSPs and technology advisors.

Deals like boxxe’s acquisition of CAE Technology Services, pushing it towards the £1 billion revenue mark, and the long-anticipated Trustmarque-Ultima merger underlined a clear trend: scale is no longer optional.

Security-led MSPs continued to roll up the market, too, with Ekco completing its third acquisition of the year, while names like Focus Group, Redsquid, and Flotek quietly kept hoovering up smaller peers. Even distribution got in on the act, with

Northamber buying Nuvias UC’s hardware division to broaden its portfolio.

Security remained the most consistent deal driver, but AI capability increasingly sat just beneath the surface of many transactions. Building those organically takes time. Buying them is faster.

The 2025 verdict

The big takeaways from the channel this year? AI stopped being optional. Vendor programmes stopped being forgiving. Infrastructure boomed – but unevenly. Consolidation accelerated because standing still stopped being viable.

Put simply, 2025 wasn’t the year the IT channel made its fortune from AI. It was the year it rearranged itself, so it still has a seat at the table in 2026.