IT supply chain developments and their impact on buying decisions – part 3

We are pleased to welcome another post from Al Nagar, Head of Benchmarking, KnowledgeBus, at Mercato Solutions, which marks the third in a series of advisory posts on the IT equipment supply chain and movements within key product categories, keeping you abreast of the latest developments to help with your purchasing decisions.

Research undertaken by the House of Commons towards the end of 2013 revealed that there are now just under 5 million SMEs in the UK, which makes up approximately 99 percent of all businesses. Ranging from one employee up to 250, these companies vary hugely in size and type, and yet one thing remains consistently important for all – budgets.

Confidence amongst SMEs is returning as the economy picks up and yet, understandably, buying teams remain cautious when it comes to areas of substantial spend. IT and technology purchases contribute to a large slice of any company’s outgoing expenditure. As such, procurement teams need to feel confident that they are getting the best possible price across desktops, laptops, tablets and other vital equipment.

Exchange rates

The euro underwent a series of highs and lows against the pound this August, starting at 0.7925 and rising to a high of 0.8022 before dropping towards the end of the month at 0.7909. Similarly, the euro performed poorly against the dollar, bottoming out at 1.3131 at the end of the month.

These wobbles were in part due to flat GDP across Europe throughout August in comparison to a healthy 0.2 percent growth in the three months prior.

Varying currency rates can have significant implications on final product prices being paid.  Currencies fluctuate daily, if not hourly, and this impacts on everything from logistics charges paid by global suppliers to prices paid by distributors and resellers.  Watching currency movements and understanding what and where product brands and categories are manufactured and supplied, can assist in a timely and strategic value purchase.  Exchange rates play a significant part in fueling the volatility of price in the IT market.

Tablets

During August, the tablet market was largely driven by news that global firms Apple, Motorola and LG are soon to launch next-generation smart watches. This could be pivotal for the emerging wearable device market, with many smart watches – including Samsung’s Galaxy Gear S – to be equipped with a 3G modem, enabling devices to make or receive messages and calls on its own.  This could prove to become a very interesting category given the challenges every IT specifier and manager is facing around Bring Your Own Device (BYOD).  The 'consumerisation' of IT is seeing the industry focus on delivery of IT for consumers first and business second, an about turn compared to just ten years ago.  What is being delivered to consumers is setting the technology bar and this is then brought into the business world, by IT or by the end users themselves.

Wearable technology is poised for significant growth as businesses tap into new forms of on-the-go technology. However, with many of these smart watches retailing at around the £170 to £200 mark, it may be some time before procurement teams are asked to purchase them as a business-critical piece of technology.

Printers

According to research from IDC, the UK was the biggest market for inkjet printers throughout the second quarter of 2014. Consumers, as well as businesses, are driving this demand, with sales increasing across both multi-function laser and inkjet printers. As a result, the Western European market saw a positive 5 percent rise compared to the same quarter of 2013.

Traditional PCs

With a plethora of devices now catering to the needs of a mobile workforce, it was a pleasant surprise to see PC sales remain stable in August, with Hewlett-Packard reporting a 13 percent overall growth in total units shipped during the third quarter of 2014. This is due in part to an increase in notebook sales, as the Chromebook begins to gather momentum, as well as a rise in desktop shipments.

This painted a contrasting picture with analysts’ predictions, as IDC announced that it expected worldwide PC shipments to fall by 3.7 percent this year. However, it’s important to note that this is an altered figure following its previous forecast of 6 percent.

Lastly, Sony’s exit from the all-in-one PC has fueled a drop in sales across the market with budget exhaustion among enterprise and consumer buyers also to blame.  However, some suppliers may still have stock they wish to shift at radical prices and Sony can offer a high-spec proposition.

 

 

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