IT Supply Chain Developments and Their Impact on Buying Decisions

Oracle

Al Nagar, Head of Benchmarking, KnowledgeBus, Mercato Solutions, continues his series of monthly advisory pieces sharing recent movements and impactors within key IT product categories, to keep you up to date with the latest developments and help support your purchasing decisions.

The euro underwent a further series of trips and stumbles in May experiencing severe falls against both the GBP and USD. Consequentially, the IT channel continued to provide as many negatives as there were positives, with Brexit continuing to hang over us.

Add to this the wave of new technologies coming to market and a three-tiered global supply chain and you have an extremely volatile market where price and stock fluctuate daily. In short, the commodity IT market remains very challenging.

Exchange Rate

Despite a strong start against the pound, the euro’s stability failed to last. Rising from a start of 0.7831 to 0.7917 on May 3, it remained stable until May 16 before incurring a sudden drop down to 0.7678 by May 19. A slight reprieve on May 23 didn’t hold either, and was quickly followed by a final drop to a monthly low of 0.7599 on May 28, before finishing the month at a dismal 0.7626 on May 31.

Against the US dollar, the euro was all downhill. Starting at 1.1444, a quick rise to 1.1541 on May 3 was the only positive. It then dropped continuously until reaching 1.111 on May 28. The last three days of the month saw little change, ending at 1.1141.

May was the second month in a row (and the third in four months) that saw the Eurozone’s inflation stuck below zero, with consumer prices falling 0.1% YoY. Policymakers agreed to more debt relief and bailout aid to Greece. Meanwhile, the countdown to the EU Referendum caused Irelands manufacturing activity to slow to is lowest in three years.

Phones and Tablets

Global smartphone shipments reached 349m units in Q1 2016, up 3.9% YoY. According to Garner, this accounted for 78% of all mobile sales.

Low-cost smartphones in emerging markets and affordable 4G smartphones were the big sales drivers in May. Unsurprisingly, Samsung topped the list with 81.1m and 23.2% of the smartphone market, with Apple coming in at number two with 51.6m units and 14.8% market share. Huawei (28.8m and 8.3%), Oppo (16.1m and 4.6%) and Xiaomi (15m and 4.3%) rounded out the top five for units shipped in Q1.

Premium Ultramobiles/Wearables

According to Gartner, the ultramobile premium segment is set to achieve revenue growth this year. The sector is set to reach revenue of $34.6b in 2016, up 16% on 2015 and will continue to grow to $57.6b by 2019.

IDC reported that Q1 shipments of detachable and convertible devices to Western Europe grew 44.7% YoY to make up 18.4% of consumer and 21.9% consumer devices. This marks an increase up from 9.2% and 16.3% respectively a year ago.

The global wearable market continues to develop, growing 67.2% YoY in Q1 with 19.7m units. Fitbit (4.8m units and 24.5% market share) maintained its dominating position in the market, followed by Xiaomi (3.7m and 19%), Apple (1.5m and 7.5%), Garmin (0.9m and 4.6%) and Samsung (0.7m and 3.6%).

IDC noted that the wearable market continues to mature and expand, with the holistic smartwatches still not a direct competition of the more specialised fitness bands, connected clothing and hearables.

Traditional PCs

Lenovo became the top notebook brand for Q1, surpassing HP for shipments despite the global market continuing to decline. According to TrendForce, global shipments fell 19% during Q4 2015 and 7.3% YoY with 35.62m units.

Lenovo’s leading 22.2% market share came with a 10% shipment decline. HP suffered a more dramatic fate, enjoying a market share of 20.4% coupled with a 21.1% quarterly shipment decline. Dell, Asus and Acer followed suit to round out the top five. Apple came in at sixth place with a 40% quarterly decline on MacBook shipments, leaving the brand with a 7.1% market share.

Lastly, a market analysis report by Gartner suggested that vendors need to look at the high-end, purpose-built gaming PC segment for long-term profitability.

 

Stat of the month: The largest amount of new products occurred on May 17, with 530 products coming to market in a single day.

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