IT Supply Chain Developments and Their Impact on Buying Decisions – Part 4

We are pleased to welcome another post from Al Nagar, Head of Benchmarking, KnowledgeBus, at Mercato Solutions, which marks the fourth 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. 

Throughout September, organisations up and down the country waited in anticipation as the results of the Scottish Referendum were unveiled. Much of the commentary in the run-up to the results focused on the possible implications of Scotland becoming independent, and the effects for procurement professionals were well covered by the Spend Matters team.

However, such news can have a dramatic effect on already volatile markets like IT. The Scottish referendum is a perfect example of how national news drives efficient markets to respond. It caused exchange rates to move and this impacted the IT supply chain, which ultimately impacts finished product prices.

Exchange rate

The UK triumph in the Scottish referendum gave the pound a boost in September which saw it remain consistently strong throughout the month. Against the US dollar, the Euro performed poorly, dropping to 1.2946 in the first few days of September. It then dipped further to 1.2861 on the 24th, before plummeting to a rather dismal 1.2658 as the month drew to a close.

Meanwhile, the Eurozone underwent some controversy following a decision from the European Central Bank to buy asset-backed securities. Designed to free up balance sheets and make more lending available to businesses, the move has not been well received, with Germany and France amongst those who have voiced concerns.

Shifting currency rates can have a huge impact on end product price as a result of manufacture, warehouse and logistics costs fluctuating across boarders and distribution networks. Changes in exchange rate can be seen to impact finished product prices for weeks and even months that follow.

Understanding the impact of currency peaks and troughs on IT components that make up the various IT products, can enable procurers to time purchases for maximum value and ensure resellers don’t use exchange rate increases as a pricing rouse.

Phones and tablets

As in August, Apple has dominated the news in the tablet marketplace recently, unveiling the new iPhone 6 with larger screens of 4.7 and 5.5 inches. Within the first few days, the technology provider sold a record 10 million units around the globe. Because of this, many expected sales of Apple’s other handsets to decline along with pricing, and yet the iPhone 5c was the fastest-selling smartphone in the UK during recent times, proving there is still huge demand amongst consumers and businesses.

With consumers often first in line for new technology (the consumerisation of IT has put businesses second in the queue), many new products hitting the shop floor are already being used by employees at home by the time they reach the workplace. As a result, your business workforce is having a greater say in deciding what devices the company should invest in, having already trialled technology as a consumer. This is particularly important when considering that the average office worker no longer spends a typical 9 to 5 in the office, but is often ‘clocking in’ from a number of different locations and environments, whether in the office, at home or somewhere in-between.

Added to this, analysts have predicted that the smartphone market will experience 19 percent growth this year compared to last, with Apple appearing to lead the market when it comes to product innovation. However, the consumer first market helps to keep desirable product prices at a premium.

Printers and traditional PCs

2014’s third quarter saw volume PC sales increase 19.1 percent year on year across Western Europe. Despite this encouraging news, September saw Samsung cut its losses and pull out of the laptop and Chromebook market in Europe. This was followed by news from veteran PC business HP, which announced the split of its printer and PC businesses – a deal which is expected to close in 2015.

Lastly, Edison has developed a new range of inkjet printers with refillable cartridges, with prices starting from £250 upwards. With a refillable tank producing an average of 2,400 printed sheets, this may be a wise pick for SMEs, one-man bands and those working from home.

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