IT Supply Chain Developments and Their Impact on Buying Decisions

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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.

The first six months of 2015 have proved a bumpy ride for the channel, with currency depreciation a significant factor. Throughout June, concerns over a possible Greek exit saw peaks and troughs for the euro as it continued to perform badly against other currencies. Vendors and suppliers have been trying to thin out inventory in these channels, but escalating prices on equipment to offset currency fluctuations are causing problems in the market. Shipments of printers, tablets, and most types of PC are all down as a result.

Exchange Rate

The euro experienced some severe highs and lows against the dollar in June. On June 1, you could buy a US dollar for €1.0988. This rate quickly dipped to 1.0937 on June 2, before spiking to 1.1277 on June 5. From there, it dropped again before recovering on June 11 to reach 1.1302. Prices were relatively flat from that point until June 19, when the euro reached its monthly high against the dollar at 1.1374. It fell again soon after, finishing the month at 1.1094.

The euro started the month against the pound in a similar fashion beginning at 0.7183 before dipping slightly to 0.7173 on June 2. It then hit a double peak stretching from June 5 to June 10, which it finished at 0.7355. Unlike the dollar however, EUR/GBP fell consistently for the rest of the month, hitting a final low of 0.7057 at the end of the month.

The Euro’s poor performance against the pound highlights problems in the euro zone. Concerns over Greek debt continued throughout June as the country went to the people for a decision about whether to accept austerity measures. This is a particularly gloomy time for the euro, and consequently for the IT industry in Europe.

Traditional PCs

June saw Gartner announce that PC shipments are expected to drop to 251 million units in 2015. This shift can be explained by fewer PC purchases in Western Europe, Japan and Russia, leading to price increases resulting from local currency devaluation against the dollar as a result. June saw PC vendors lower their inventory levels to minimise pricing exposure in the channel. Buyers can expect levels to drop by at least 5% until the end of the year.

PC shipments are also expected to fall in 2015, down 6.2% according to IDC, with a rise in the use of tablets and smartphones contributing to lower demand. The shipment of windows 10 later this year will be balanced out by a free upgrade for consumers, and commercial users will evaluate the operating system before deploying.

Falling euro values were also responsible for revised shipment predictions for notebooks. Analyst firm TrendForce announced that shipments fell 17.5% in Q1 compared to the previous year. It predicted increases of 2.8% and 8.6% in Q2 and 3 respectively.

Storage

According to IDC, the EMEA market for external disk storage systems fell by 6% in quarter one compared to the previous year - totalling $1.7 billion in revenue. Total capacity grew by 16% during the same period. Significant instabilities in currency have driven down dollar-based revenues, but the market actually grew almost 15% year on year when measured in euros.

IDC pointed out that a rise in the adoption of flash-based storage is slowing the decline in cost per gigabyte. This is particularly so in Western Europe where the adoption of flash-based memory is very strong.

Printers

Market research firm Context announced that unit shipments of printer hardware to the EMEA region fell 8% year on year in the first quarter of 2015. These figures were dragged down by the Middle East, Africa and Central and Eastern Europe.

Western European shipments overall were flat, with the UK faring particularly badly, with an 11% year on year fall. Finland, Iceland, Greece, Spain, and Switzerland all performed well, enjoying double-digit growth for the period.

 

Stat of the month: June 19 saw the most product launches in a single day at 714.

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