IT Supply Chain Developments and Their Impact on Buying Decisions

We are pleased to publish the first post of the new year from Al Nagar, Head of Benchmarking, KnowledgeBus, Mercato Solutions, which kicks off this year's series of advisory posts sharing recent movements and impactors within key IT product categories, keeping you abreast of the latest developments to support your purchasing decisions. 

The weeks leading up to December saw Christmas shopping go wild with US shopping holidays Black Friday and Cyber Monday crossing the pond and driving a £810 million online spend in the UK. Technology such as iPads, tablets and wide-screen televisions were high on the shopping list, as the Centre of Retail Research predicted that the public would spend £17.4 billion online in the run-up to Christmas this year.

The 5am queues were testament to the fact that consumers were keen to secure products for the best price and it was interesting to observe many suppliers were trying to leverage this consumer hype to coax spend out of B2B procurers. But the big question is, did they manage to win procurement teams over? And were there actually any good deals to be had for business buyers?

Exchange rates

The Euro had a positive start against the US dollar at the beginning of November, coming in at 1.2566. It then suffered a sharp fall to 1.2397 on the 8th November before finishing at 1.2447. It fared worse still in December, slumping from 1.2447 at the beginning of the month to 1.2225 on the 21st and then ending the month at 1.2155.

Throughout November, the Euro performed more positively against the pound, beginning the month at 0.7858 before accelerating to 0.8011 mid-month. It then fell slightly towards the end of the month, finishing at a respectable 0.7944. It had a rather dismal performance in December, beginning at 0.7954 before hitting an initial low of 0.7865, falling to 0.7819 in the third quarter of the month, and finally hitting a disappointing 0.7825 as we saw in a new year.

The slump in December can largely be explained by Russia whose falling oil prices caused whispers of a financial crisis. This subsequently caused Deutsche Bank analysts to raise the alarm and warn that 12 European banks may lose €7.5 billion between them if things continue as they are.

Phones and tablets

ABI Research announced that sales of LTE handsets were up in November as today’s user looks for faster wireless communication of high-speed data as standard. This is particularly crucial for commuters who often have to rely on a 4G-enabled mobile devices in the face of poor Wi-Fi connections. Shipments are expected to near 676 million 4G units in 2015, up from a projected 472 million this year.

The tablet market continues to slow as we hold on to our devices for longer. According to IDC, revenues will grow just 7.2% this year compared to over five times that in 2013.

Smartphone sales grew by 20% during the third quarter of 2014 according to figures from Gartner. This has had a knock-on effect for features phones which dropped by 25% during the same period.

To keep pace with market changes, vendors are now producing a range of lower-priced, entry-level devices that favour the Android operating system. Finally, as we look to 2015, we’re likely to see adoption of larger screens – a move that will no doubt pull Apple into that space, with analysts already in talks about a 12-inch iPad Pro tablet.

Premium Ultramobiles

Back in July, Gartner reported that Premium Ultramobiles were one of the fastest-growing device categories on the market, fast overtaking sales of traditional desktop and notebook PCs. There was some hesitation around this in November as IDC reported that only 8.7 million of these devices will ship this year as premium ultramobiles hold on to a measly 4% share of the total tablet and 2-in-1 market.

This looked set to be particularly damaging news for industry giants such as Microsoft who carried out mass investment into its Surface Pro device. Fast forward to December however, Gartner announced that it expected sales of Premium Ultramobile devices such Surface Pro and Macbook Air to double in the next two years, from 39 million units in 2014, two 62 million in 2015, and 85 million in 2016.

Storage

The EMEA market for personal and entry-level storage crept up slightly during the third quarter of 2014, with approximately 7 million units shipped. This represented a 0.4% growth compared to this time last year. Despite this encouraging news, revenues were down 2.3% from last year to $551 million.

The growth in this sector can largely be apportioned to personal and entry-level storage which grew 0.5% in unit terms as users look to their devices to store personal files including movies and audio, as well as business related data.

During December, Futuresource Consulting announced that external hard drive units shipped in the EMEA region fell 6% in 2014 to 22.2 million drives with a 7% decline overall during the third quarter of 2014. Lastly, this slip can largely be explained by market decline in key regions including Germany, which make up on fifth of the total demand.

Discuss this:

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.