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.

 

From the Budget to budgets, the topic of spending was on everyone’s mind during February. The Chancellor’s announcement in March was expected to be less consequential than most. On reflection however, it may have been slightly more significant, with businesses trying to grapple with the main take-aways and understand the immediate impact to their business.

The start of a new financial year in sight, coupled with ongoing currency woes, saw buying teams contend with multiple challenges when purchasing IT equipment.

 

Exchange Rate

The euro enjoyed a steady rise against the pound in February, dipping only a few times in what was otherwise a month of upward trajectory. Starting the month at 0.7595, it experienced a slight drop to 0.7571 on February 2, before rising rapidly to 0.7808 on February 11. A series of slight highs and lows followed until it fell to 0.7724 on Feb 21. This was quickly followed by a rise to a high of 0.7907 on Feb 25, before finishing the month at 0.7859.

Against the dollar, the euro jumped quickly, rising from 1.0860 to the monthly high of 1.1312 on Feb 11. From here it experienced a long, slow decline, eventually resting at 1.0907 at month’s end.

The European Central Bank promised stimulus if the economy didn’t pick up. The unexpected drop toward the end of the month into negative inflation (-0.2%) caused by low energy prices, has all but confirmed that the monthly policy meeting on March 10 will result in more policy easing.

Phones and Tablets

Smartphone sales saw little growth during the last quarter of 2015, growing just 9.7% YoY to 403m. Gartner reported this as the segment’s slowest growth rate since 2008.

According to the report, the annual tally was more promising, reaching 1.4b which signified a 14.4% growth compared to the previous year. While Samsung and Huawei were the only top-five vendors to increase sales, Apple’s iPhone experienced its first ever sales decline, down 4.4% YoY.

Slow quarterly sales can be attributed to a number of factors including sales of low-cost smartphones in emerging markets and a growing demand for premium smartphones. Currency devaluations against the US dollar may have also played a role.

In other smartphone news, we’re starting to see a greater focus on the security-conscious business market. HP launched its Elite x3 smartphone running on Windows 10 and boasting fingerprint and iris recognition security. A Desk Dock accessory allows office workers to use Microsoft Office apps with their keyboard, mouse and display, while the Mobile Extender device enables a 12.5” display and keyboard with access to the phone’s files and apps.

Traditional PCs

Global notebook shipments dropped significantly in 2015. TrendForce reported that this was largely due to the impact of currency depreciation, with shipments falling 6.3% YoY to 164.4m.

Lenovo was a shining light in an otherwise tough year for notebook vendors, narrowing its market share gap on HP with a 6.9% increase in unit shipments to grab 19.9% of the market. HP maintained its top spot with 20.5% of the market. 2016 will likely see the two vendors continue their rivalry, while Dell is expected to retain third place thanks to robust Chromebook sales in the U.S.

Premium Ultramobiles/Wearables

IDC analysis highlighted that, in the last quarter of 2015, 14m tablets were shipped to Western Europe – a quarter of these were detachable. According to the same analysis, Microsoft maintained its position as the established detachable leader, while Apple captured a good share of the market thanks to the entry of the iPad Pro during Q4 of 2015.

The wearables market continues to go from strength to strength. Global shipments increased 126.9% YoY to 27.4m in Q4 2015, taking annual shipments up 171.6% to 78.1m YoY.

Gartner predicted that global wearable sales will grow 18.4% YoY in 2016, forecasting 274.6m units to be sold, up from 232m in 2015. Revenue is also expected to generate $28.7b, of which $11.5b (50.5m units) from smartwatches.

 

Stat of the month: The largest number of new products occurred on February 5, with 546 coming to market in a single day.

 

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