IT Supply Chain Developments and Their Impact on Buying Decisions

Ian Nethercot, MCIPS, Supply Chain Director at IT digital marketplace Probrand,  continues his monthly roundup of the latest movements in the IT market to help with your buying decisions.

As we entered June, it was a tearful goodbye to May – leaving the Conservatives to set out their stall as the leadership bid hots up. Who the next Prime Minister will be may not seem like it’ll affect the cost of your next technology purchase, but this is just one influencing factor – along with the emergence of new tech trends and manufacturing component shortages – that can impact cost and supply.

To help IT buyers maintain a clear view of what represents a fair price, here are some of the latest developments and major movements that are influencing key IT product categories.

Exchange Rate

After dropping from 0.8593 on May 1st to 0.8499 by May 4-5th, the euro had a positive month against the pound. It rose steadily to 0.8768 by May 18th and continued after a small plateau, hitting 0.8823 by May 24th and 0.8840 by May 31st.

The euro had a more turbulent month against the dollar. Starting at 1.222 on May 1st and falling to 1.1177 by May 3rd, it recovered – rising to 1.1232 by May 10th. After a dip, it hit a high of 1.1234 by May 13th, and then crashed to 1.1155 by May 18th. It began to rally on May 23rd, reaching 1.1202 by May 26th, but then began a rapid collapse on May 27th, falling to the month’s low of 1.1134 on May 30 before finishing at 1.1151.

Manufacturing activity lowered for a fourth consecutive month, with PMI dropping to 47.7 in May from 47.9 in April. Keeping an eye on what manufacturers are doing is crucial for IT buyers – they are the ones responsible for forecasting trends, planning product development and deciding exactly what’s going to hit the shelves and when. A drop in manufacturing activity can affect availability of stock, which subsequently affects the cost and availability of everything else.

Phones and Tablets

According to Gartner, global smartphone sales to end users dropped 2.7% YoY in Q1 to 373m units. Samsung topped the list despite its 8.8% YoY drop to 71.62m units, ahead of Huawei (58.43m), Apple (-17.6% to 44.56m), OPPO (29.6m) and Vivo (27.36m).

TrendForce noted a 9% YoY drop in Q1 smartphone volume production to 311m units. By vendor, Samsung held on to the top spot with 23.3% market share, ahead of Huawei (19.5%), Apple (13.3%) OPPO (8.6%) and Xiaomi (7.9%). Looking ahead, TrendForce said production will drop 3.7% YoY in 2019 to 1.4bn units.

IDC said that global shipments will fall 1.9% YoY in 2019 on the back of an expected 5.5% YoY drop in 1H shipments however, a more positive 2H is looming on the back of 5G handset demand.

One reason for the drop in smartphone volume production and sales may be because people are holding onto their phones for up to two months longer than they used to, according to Kantar. We also know that smartphones aren’t as cheap as they used to be, so there is an incentive for business buyers to eke out usage before moving on to a new model.

Traditional PCs

Global notebook shipments dropped just 0.8% YoY in Q1 to 36.97m units, according to TrendForce. By vendor, HP topped the list for the 12th consecutive quarter with 2.6% YoY growth to 9.23m units and 25% market share, ahead of Dell, Lenovo, Apple, Asus and Acer. Looking ahead, TrendForce said notebooks could enjoy a 10% YoY shipment growth in Q2, though only HP and Apple will register growth.

According to IDC, total shipments of traditional PCs including desktops, notebooks and workstations to the EMEA region will drop just 0.4% YoY in 2019 to 71.3m units. Further ahead, it predicted that the market will drop a further 1.5% YoY to 67.22m by 2023.

Displays

Global TV panel shipments enjoyed 4.2% YoY growth in Q1 to 70.02m units, TrendForce reported. By supplier, BOE topped the list ahead of LG, Innolux, CSOT and Samsung. The report also noted China’s top three suppliers accounted for over 40% of the market.

TrendForce also reported that gaming monitors grew 112% YoY to 5.4m units in 2018 and are expected to reach 7.9m units in 2019, up 46% YoY. ASUS topped the list ahead of Acer, Samsung, AOC/Phillips and Micro-Star.

Context said Western Europe’s desktop monitor sales grew 11% YoY in April on the back of strong mainstream consumer and premium business model sales. The report noted a rise in interest in 31.5” models, and that average selling prices are dropping, with 34” alone down 12% to below the average price of 31.5” monitors.

In other news, HIS said the trade war between the US and China is resulting in a drop in Q2 panel demand. South Korean makers will see a 3% QoQ volume decline to 17.3m units, while Chinese brands expect a 13% QoQ drop but grew 5% YoY in Q1 to 20.6m units.

Monthly statistics

The number of new products that came onto the market was pretty low, with a high of 1,698 new products launched on May 14. This is the lowest its been for a while, compared to a high of 5,106 launched on April 15th, and 2,922 on March 18th.

The highest number of total price increases happened on May 20, with 53,859 price hikes occurring across a variety of product categories. At the opposite end of the scale, price decreases in May hit a high of 31,156.

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