IT Supply Chain Developments and Their Impact on Buying Decisions

Ian Nethercott, MCIPS, Supply Chain Director at IT digital marketplace Probrand,  returns to kick off 2019 with his monthly roundup of the latest movements in the market for IT category buyers. 

2018 was a turbulent year – Brexit is surely the most pressing economic issue of our time, with periods of instability undoubtedly only set to continue, causing knock-on effects for the IT buyer. That said, there’s nothing like the promise of January to evoke a sense of optimism as we look to the start of another new year.

To help navigate this complex landscape, here are some of the latest developments and major movements that are influencing key IT product categories.

Exchange Rate

Very rarely do we share positive news about fluctuating exchange rates, but it was good news for the euro against both GBP and USD currencies as we rounded off 2018.

Against the GBP, the euro started at 0.8867 and rose sharply to 0.9036 by December 11, dipped, recovered and fell to 0.8967 by Christmas Day before hitting 0.0931 on December 28 and ending the month at 0.8985.

Against the US dollar, the euro rose from 1.1314 to 1.1368 by December 4, dropped, jumped to 1.1399 by December 10, fell to a low of 1.1300 on December 15-16 before rising to 1.1431 by December 20. From there, it fell again, then hit a high of 1.1449 by December 28 before dropping slightly to see out the month at 1.1444.

December 30th 2018 marked the 20th birthday of the euro but it wasn’t all cause for celebration. Reuters noted that inflation dropped to 1.6% for December, down from 1.9% in November and lower than an expected 1.8%. PMI also fell 0.4 that month to 51.4, in its lowest since February 2016.

Phones and Tablets

I remember a time when flip phones were the height of sophistication and it seems that this trend is set to return, albeit in a different guise. While the iconic Motorola Razr looks like it’s soon set to make a comeback, 2019 will be the year that foldable smartphones enter the global market with TrendForce predicting market penetration of 1.5% by 2021.

Jumping back to 2018, Huawei and Xiaomi were the dominant players of Q3 2018, driving smartphone sales to 389m units and a 1.4% YoY growth. Without these two vendors and their expansion in emerging markets, Gartner said global shipments would have ended down 5.2% YoY.

Global smartphone shipments by assembly volume dropped 4.4% YoY in Q3 on the back of weak channel demand. According to IDC, 355.8m units were shipped, bringing the total for the first three quarters over the 1bn mark and putting it on par with 2017.

In another report, IDC said global smartphone shipments will decline 3% in 2018 before rising again in 2019 and continue through to 2022. By the numbers, the IDC report suggests global 2018 shipments will reach 1.42bn units, down from 1.47bn in 2017 and grow to 1.57bn units in 2019.

In tablet news, global tablet shipments (including both slates and detachables) are expected to drop 3.5% YoY from 149.2m units in 2018 to 129.4m units by 2022. In Western Europe, total tablet shipments will achieve minor growth on the back of detachable units, up from 30.43m to 30.73m units from 2018-2022.

Traditional PCs

Western Europe PC shipments – including desktops, notebooks and tablets – dropped 3.3% YoY in 2018 to 76.3m units. According to IDC, the market will drop another 3% in 2019 to 74m units and continue at 1.8% until 69.69m units shipped by 2022.

Detachable tablets, ultra slim and convertible notebooks and all-in-one desktops are expected to enjoy some growth, while slate tablets and traditional notebooks and desktops are all set for big declines.

On a global scale, the PC market fell 3.9% YoY in 2018 and is expected to decline at the same rate of 1.8% YoY to 378.3m units by 2022. According to IDC, detachable tablets and some notebooks will prove the only shining light in another negative-facing market.

Premium Ultramobiles & Wearables

Virtual Reality is still big on the scene, with global shipments set to grow 29% YoY in 2019 from 4.65m to 6m units. Meanwhile, Sony will continue to lead the market at 2.2m units. HTC will reach 0.8m and the three Oculus devices (Rift, Go and Quest) will combine to total 1.7m units, all according to TrendForce.

According to IDC, global wearable shipments rose 21.7% YoY in Q3 2018 to 32m units. Xiaomi led the market with 90.9% YoY growth to 6.9m units, followed by Apple (+54% to 4.2m) and Fitbit (-3.1% to 3.5m). Huawei and Samsung rounded out the top five.

Monthly statistics

Last month saw a relatively high number of new products coming onto the market with 7,460 products launched on December 6. Meanwhile, the highest number of price increases happened on December 1, with 49,199 price hikes occurring across a variety of product categories. At the opposite end of the scale, price decreases in December hit a high of 17,861 on December 3.

 

 

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