IT Supply Chain Developments and Their Impact on Buying Decisions

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 abreast of the latest developments and help support purchasing decisions.

Al Nagar 1

October was a gloomy month for the IT channel with the euro continuing to plummet. This caused something of a quandary for economic experts looking at the state of the global economy, with currency disparities continuing to hamper IT pricing and therefore IT buying.

Instability with the euro highlights the knock-on effect for the whole IT supply chain and how it can impact the end product price in a particular zone or region.


Exchange Rate

Overall, the euro fared poorly against the pound in October. Starting the month at 0.7377, it dipped slightly before climbing to a monthly high of 0.7440 on October 13. From there, it took a turn for the worse. It dropped in two sharp increments, one from October 14-16, and another from 23-23, with its biggest value dive during the latter. It ended the month at a low of 0.7128.

The euro faced a similar fate against the US dollar. It began the month at 1.1168 before climbing to a monthly high of 1.1437 on October 15. From there, it dropped slightly, drifting for a few days before undergoing a disastrous drop on October 21 where it finished the month at 1.1001.

The cause of the euro’s woes this month lay with a proposed cut in interest rates, as the European Central Bank promised no more quantitative easing. This comes at a time when the deposit rate in the Eurozone is already negative, at 0.2%. We’ll have to wait until December for a final decision – however if the European Central Bank goes ahead, this may result in a possible further fall in the Euro’s value.

Phones and Tablets

The third quarter of 2015 saw global smartphone shipments grow by 6.8% compared to the previous year, to 355.2 million units. According to IDC, this was the second-highest quarter of shipments ever. Unsurprisingly, Samsung and Apple were once again at the forefront of the market. Samsung trumped Apple, enjoying a 23.8% market share compared to Apple’s 13.5%.

Things were not as rosy in the tablet market. IDC saw the fourth consecutive quarter of worldwide shipments decline, with 48.7 million units shipped in the third quarter of 2015, representing a 12.6% decline year on year. This perhaps highlights that people are holding onto tablets for longer. Surveying 19,000 consumers across the UK, France, the US, China, Brazil, and India, Gartner revealed that only 17% plan to purchase a tablet in the next 12 months.

Premium Ultramobiles

The same survey from Gartner revealed some interesting insights into premium ultramobiles. 13% of laptop owners who would buy in the next 12 months claimed that they would purchase a convertible notebook (with a screen that doesn’t detach, but which folds around to create a tablet format). An additional 12% said that they would purchase a 2-in-1 with a detachable screen. The rise in ultramobiles comes as policies around BYOD (bring your own device) and flexible working become more common in the workplace.

In other news, Apple failed to break out Apple Watch sales in its end –year-results. Despite this, analyst firm Canalys said that shipments had reached 7 million in the last two quarters, outpacing all other smartwatch sales in the past five quarters.

Traditional PCs

EMEA PC shipments slid 23% in October to 18.4 million according to IDC. Western Europe fell 18.4% to 11.8 million units, while politically-fraught Central and Eastern Europe (CEE) underwent a particularly poor month, plummeting 31.3%.

The consumer market fared even worse. Western European consumer shipments plunged 24%. This wasn’t helped by the comparison to strong Q3 2014 shipments of low-cost Bing notebooks.

The UK market did marginally better than other European markets, but still underwent an 11.4% decline.

The story wasn’t much better for vendors, all of whom saw declines in EMEA shipments. Acer suffered the worst with a 38% plunge, while Dell managed an 11% decline in comparison. HP remains king with a 22% market share, although it still saw a 17.1% fall in EMEA shipments during the quarter.

Stat of the month: The largest number of price increases happened on October 27, with 570 rises in a single day.

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