IT Supply Chain Developments and Their Impact on Buying Decisions

Al Nagar, Head of Benchmarking, KnowledgeBus,  Mercato Solutions, continues his series of advisory pieces sharing recent movements and impactors within key IT product categories, to keep you abreast of the latest developments and help support purchasing decisions.

It’s not just George Osborne that has budgets on his mind this month, as businesses across the country approach a new financial year. For procurement teams, allocating and distributing spend across different departments up to 12 months in advance can be a daunting task. This is particularly the case for IT buying teams who often have to contend with new technologies entering the market.

News in February was largely dominated by the Eurozone crisis, as the euro continued to perform poorly against other currencies. This is a perfect example of how fluctuations in currency can cause a ripple effect across the whole IT supply chain, with shifting exchange rates ultimately impacting the end product price.

Exchange rates

Business headlines in February were dominated by concerns around the euro. This was largely instigated by news of a potential abandonment of the Greek bailout that would mean discarding an existing program for its economy. As we continue into March, Greece’s euro exit indeed seems inevitable. As a result we continued to see the currency decline against both the pound and the dollar in February.

The euro started the month at 0.748 against the pound, rising to 0.755 within the first week before slowly – but surely – slipping down to 0.726 against GBP by the end of the month.

Its performance was even more dismal against the dollar. It began at 1.127 on February 1, peaking at 1.144 in the first week of the month. It then experienced a series of highs and lows, rising to 1.140 by Valentine’s Day before dropping off to a dramatic end of 1.131 as the month came to a close.

Memory

Analyst company DRAMeXchange revealed that mobile Dynamic Random Access Memory (DRAM) revenues reached a staggering $3.6 billion during the last quarter of 2014. This represented 27.8 percent of total DRAM industry value and just fewer than 40 percent of total DRAM shipments. Analysts have predicted that mobile DRAM prices will be more stable in the first quarter of 2015, declining a mere 3 percent.

Apple is expected to launch new iPhone models towards the end of the current year, with an increased memory of 2 GB. Double the memory of current models, business benefits will include the ability to have more applications run alongside one another, as well as allowing data to be more readily available.

As when any new product comes to market, procurement teams are minded to keep a close eye on the inevitable price increase that comes hand in hand with new models.

Printers

Printer revenues enjoyed a positive increase of 1.7 percent in the fourth quarter compared to the previous year, reaching $15.2 billion. While inkjets still make up the market majority, we are beginning to see the market lean towards colour lasers as well. According to IDC, the latter grew 8 percent during Q4 to reach 2 million units.

Within this, multifunction devices performed particularly well throughout 2014 with the 31-44 page per minute category growing just under 25 percent year on year. The old days of standing by the office printer and watching it painfully print out page by page are long gone as our demand for everything on our desks ‘by yesterday’ continues to grow.

Premium Ultra Mobiles

Lastly, IDC reported that the business market for ultra mobiles will reach more than 11 million units by 2019. However, much of this growth is set to lie with two-in-one hybrids, which are designed as laptop replacements, and which we technically classify as premium ultramobiles.

Stat of the month: The largest number of price increases happened on February 3, with 12,050 rises in a single day.

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