IT Supply Chain Developments and Their Impact on Buying Decisions

Al Nagar 1Al 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.

After months of live TV debates, on the road campaigns and even celebrity interviews (enter Russell Brand), May saw one of the tensest elections for several decades. Millions of us stayed tuned into the early hours as we waited to learn who our new Prime Minister would be. When any new government comes into power, so does a re-ordering of its Cabinet Office. For the IT community, notable appointments included MP Matt Hancock who took over from Francis Maude as minister for efficiency and reform.

Uncertainty around major political change can often have a knock-on effect for buying teams, particularly in the run-up period to an election, or other significant event. Businesses can become more cautious about their spending, resulting in a reduction in orders. Depending on the severity, this can have wider implications right through the supply chain.

As we wait for the new Cabinet to find its feet, we are all asking, ‘‘how will the new government affect me and my business?’’

Exchange rates

Continuing tension between the European Central Bank and Greece saw the Euro’s price slip in May, as discussions surrounding the risk of a Greek exit from the Eurozone remained unresolved.

Perhaps unsurprisingly then, the Euro fared poorly against the US dollar, beginning the month at 1.1157, but finishing up at 1.0988. From start to finish, its journey was volatile. It rose initially to 1.1221 on the second day of the month before slipping back down to 1.1146 by May 6, rising back up to 1.1319 two days later. Up and down like a yo-yo, it fell again to 1.1161 on May 12 before enjoying a monthly high of 1.1444 on May 17 and 18. From there, it took a turn for the worst, declining to a low of 1.0886 on May 28.

This fluctuating pattern was largely the same for the Euro against the British pound. The Euro started at 0.7244 before reaching a monthly peak of 0.7431 on May 8. From there, it experienced a series of drops and rallies, reaching its first low of 0.7169 on May 13, before recovering to 0.7276 on May 17 and 18. Its final low of 0.7080 came on May 28, before finishing in at 0.7183 at the end of the month.

Traditional PCs

According to market research firm Context, desktop computer sales were down 4 percent in Western Europe compared to the previous year.Notebook sales saw healthy growth, up 23.2 percent year on year. This included 2-in-1 sales however which are becoming increasingly popular amongst businesses as employees seek a more flexible solution.

The UK also enjoyed buoyant figures, with PC unit sales increasing 32.4 percent. This topped the growth figures for European sales.

Globally, shipments of all PC types are predicted to fall 6.2 percent in 2015, according to IDC. Windows 10’s shipment in July won’t necessarily provide a boost either, as it comes with a free upgrade program for the first year.

In the server market, shipments grew 13 percent worldwide year on year in the first quarter of 2015. This represented the strongest shipment growth in five years according to Gartner. Hyperscale applications using relatively cheap x86 servers contributed to a growth in revenues of 17.9 percent. HP, Dell, and Lenovo were the big top three throughout May, topping the shipment tables in that order. North America, MEA and Asia/Pacific saw the highest growth rates in this category, leaving Wester Europe amongst one of the poorer performing markets.

Phones and Tablets

The first quarter of 2015 saw tablet sales fall 17.7 percent in Western Europe according to Context Research. Windows tablets bucked this trend, growing 114.6 percent, albeit from a small base.

Worldwide shipments of tablets and 2-in-1s will fall 3.8 percent this year, although different subcategories may perform slightly better. Larger-screen devices for example, are expected to undergo a less dramatic decline, while small-screen tablets in general will drop faster, descending from a 64 percent share last year to a 58 percent share this year in revenue terms. This category is being affected by the phablet market as businesses continue to show a leaning towards larger-screen, handheld devices.

Smartphone sales grew 19 percent year on year in the first quarter of 2015 to an impressive 336 million units. According to Gartner, this was driven strongly by emerging markets. Apple continued to push the iPhone in emerging markets such as China as a means to narrow the gap with Samsung. This move paid off as Apple topped the market in smartphone revenues for the first time during the quarter. This resulted in a dip for Samsung as its market share slipped down 6.2 percent to 24.2 percent year on year. Overall however, it remained stable as it continued to top the market in terms of revenue share, leading Apple’s 17.9 percent.

Stat of the month: May 21 saw the most product launches in a single day at 127.

 

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