IT supply chain developments and their impact on buying decisions – part 2

We are pleased to welcome this post from Al Nagar, Head of Benchmarking at Mercato Solutions, which marks the second in a series of advisory posts on the IT equipment supply chain and the movements that impact buying decisions. 

As we continue into 2014, the consensus amongst UK businesses remains largely optimistic, with confidence in the economy continuing to build. Many are looking at this as an opportunity for growth, with investment in IT and technology the driving force behind expansion. Developing your workforce comes hand in hand with an increase in devices and technologies, and yet with so many options available on the market at any one time, understanding the margins that you’re paying on top of market value can be challenging – particularly when considering that market prices are fluctuating daily.

With this in mind, Al Nagar continues his series of advisory pieces, sharing recent movements within key product categories and keeping you abreast of the latest developments which impact your purchasing decisions.

Exchange rates

Despite a slight peak at the beginning of the month, the euro underperformed against both the pound and the dollar in May, falling by approximately 1.5%.

When a currency experiences a similar drop across two currency pairs, the problem usually lies with the strength of that currency as opposed to what’s happening in other currencies. The European Central Bank lowered its economic outlook at the beginning of May, with predictions that low inflation would likely constrict the European economy until at least 2016. Furthermore, ongoing tensions between Russia and the Ukraine haven’t helped.

Understanding the ups and downs of relevant currencies is key to a procurement team’s buying decisions, with everything from the manufacturer’s location to the time of day affecting fluctuation. Gaining a grasp of why changes in currency have occurred will help procurement managers to gain a more holistic view of the market, as well as understanding the potential opportunities across various purchases.

Laptops

One of the biggest developments for mobile users has been the unveiling of Microsoft’s Surface Pro 3; a tablet device that promises to deliver all the components of a laptop. With a lightweight 12-inch screen, and up to 9 hours battery life, this product will largely be targeted towards commuters as business users look to a more convenient, lightweight option.

In other news, Samsung has announced that it will be dropping sales of its notebook in South Africa, a move that will likely be followed by a pull-out across the wider market as we approach 2015.

Tablets

Predications for tablet sales have continued to drop throughout the year with IDC revising expected sales from just over 260 million units to 245.4 million. These figures may sound disappointing but it’s important to note that this still represents 12.1% year-on-year growth, which is fairly robust.

A device that is seeing even more encouraging growth is the phablet (large phone) which is enjoying considerable popularity as consumers buck the trend for having the smallest, newest, shiniest device and hold on to their phones for longer. This highlights that new devices coming to market are seeing more longevity, with business and procurement teams having to invest less regularly in new devices.

Desktops

There were a number of new products on the market last month including LG’s all-in-one Chromebase desktop. A Chromebox built into a monitor, the product runs on Intel’s Celeron Haswell processor and follows in the footsteps of other PC manufacturers, albeit a slightly more sophisticated version. Priced at around £279.99, LG’s latest product looks likely to deliver value for money, with large businesses looking to purchase multiple devices expected to see this as an attractive investment.

Elsewhere, Windows is still holding its own in the desktop operating system space with figures on Windows 8.1 seeing 6.35% market share in May up just under 6% from April.

 

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