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 ITproduct categories, to keep you abreast of the latest developments and help support purchasing decisions.

April was another tense month, with the Brexit referendum now imminent. Whether you’re in the ‘stay’ or ‘leave’ camp, April and May saw both campaigns build momentum, with the possibility of leaving the Eurozone continuing to weigh heavily on the UK economy.

The ‘will we,’ ‘won’t we’ sense of anticipation is continuing to have an effect on already impulsive markets like IT. Crucially, we can see a direct correlation on currency and exchange rates as markets prepare to respond to a potentially impactful situation.

Exchange rate

The euro had a strong start against the British pound in April before taking a dramatic turn. Starting out at 0.7964, it rose steadily to 0.8079 by the first week of April before falling hard to 0.7957 on April 13. After nearly a week of relative stability, the euro nosedived to 0.7789 by April 23 before reaching its monthly low of 0.7759 by April 27. The last three days of the month saw it enjoy a slight reprieve, lifting to finish out at 0.7831.

It was a different story against the US dollar. After starting the month at 1.1385, the euro sat stagnant for nearly two weeks before undergoing a dramatic fall from 1.1403 on April 13 to 1.1264 the next day. On April 20, we saw a positive rise occur to 1.1349. This was quickly dashed however with the euro hitting its monthly low of 1.1220 three days later. It then took a surprising turn, skyrocketing to finish the month at 1.444.

What appears to be the only positive report to come out of the Eurozone this month was that the economy grew 0.6% across Q1 2016. Nevertheless, the region is saddled with debt with deflation also hitting in April, leaving the EU with more headaches.

Phones and Tablets

Apple’s iPhone posted its biggest ever quarterly shipment decline in Q1 2016, falling 43.8% from 75m to 42m units compared to this time last year. This has had a significant impact on the overall global smartphone market, with an 18.6% quarterly decline in global shipments. Conversely, Samsung exceeded expectations with 82m units and 2.5% increase on the previous quarter.

According to analysis from TrendForce, Chinese brands accounted for 42.9% of all shipments in Q1, reaching 125m units. This was something of a milestone, surpassing Samsung and Apple’s combined totals for the first time.

Apple is not expected to return any positives for the remainder of the year, according to TrendForce, which revised its estimate for iPhone sales down 10% from last year to 213m units.

In tablet news, IDC reported that shipments fell 14.7% YoY in Q1 2016 to 39.6m units although this included detachable units. TrendForce reported a 35% fall in tablet shipments for Q1 compared to the same period of 2015, with a YoY drop of 7.9%. Meanwhile, Amazon made headlines by shipping 2.2m units in Q1, representing a 47% drop on the last quarter of 2015 but up 337% YoY.

Traditional PCs

Lingering 2015 issues saw channels, vendors and users remain cautious about new purchases in April. According to IDC, Q1 2016 saw global PC shipments fall as expected, down 11.5% YoY to 60.6m units. On a brighter note, inventory reductions appear to be wrapping up. With the corporate and education buying season historically starting in Q2, a reprieve is on its way for the PC market.

Gartner was slightly less pessimistic in its figures. The analysts reported a fall in global PC shipments during Q1 from 9.6% YoY to 64.8m units. Currency issues against the US dollar were noted as the reason for the impact on the industry. Whatever figures you choose to look at, it represented the market’s 6th consecutive quarterly decline and the first time since 2007 that volumes fell below 65m.

Regionally, shipments to the EMEA region were down 10% YoY to 19.5m units, according to Gartner, with the region proving to be somewhat fragmented. Shipments to the UK and Germany remained stable, while France was hit by HD TV upgrades, the Middle East with oil prices and economical and political instability, and Russia and Ukraine with extended festive activities.

Printers

Lastly, reports from PR Newswire highlighted that Metal 3D printing has become the fastest-growing segment of 3D printing, with metal printer sales up 48%. The report suggested that 3D metal printing is now the way of the future, earmarking plastic 3D printers for prototypes and educational purposes.

 

Stat of the month: The largest amount of new products occurred on April 27, with 27,750 products coming to market in a single day.

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