IT Supply Chain Developments and Their Impact on Buying Decisions

Ian Nethercot, MCIPS, Supply Chain Director at IT digital marketplace Probrand, continues his monthly roundup of the latest movements in the IT market to help with your buying decisions.

What does the election of a new Conservative leader and a 20-minute power outage have in common? They both caused huge ripples in the IT supply chain – from shortage of stock to plummeting currencies, the last few weeks of July into August was a rocky road for technology buyers.

To help maintain a clear view of what represents a fair price, here are some of the latest developments and major movements that are influencing key IT product categories.

Exchange Rate

After a rollercoaster start, the euro enjoyed a strong finish in July against the pound. Starting at 0.8942 and rising to 0.8971 on July 3, it experienced a minor dip before climbing to 0.8996 by July 10. From there it fell to 0.8955 by July 13, jumped to a monthly high of 0.9032 four days later, dropping to 0.8966 on July 21-22 before reaching a low of 0.8932 on July 25. From there it jumped to 0.9162 on July 30 before settling at 0.9142 on July 31.

Against the dollar, it was a much sorrier state of affairs. Starting from a high of 1.1321, the euro steadily declined to 1.1208 by July 9 and bounced back to 1.1268 on July 14, only to continue its spiral, falling to 1.1123 by July 27 and ending the month down at 1.1129.

As we tipped into August, the pound fell 0.5% against the US dollar and the euro, taking it to $1.2153 and €1.0905 on the money markets. This is the lowest it’s been for 28 months and it was no coincidence that it coincided with the election of a new Conservative leader and talks about whether Mr Johnson could take Britain out of the EU without a deal.

This is another example of a geopolitical factor impacting currency fluctuation. We’ll have more on this in next month’s column as it plays out …

Memory

In July, we saw the NAND flash market become more and more volatile due to the trade war between Japan and South Korea, causing stock shortages and an ongoing sharp rise in price. Beyond political reasons, there was a 20-minute power outage in one of the manufacturing plants for memory products. It may not sound like a long time, but to get things back up and running to full capacity – including re-configuring the manufacturing lines – is a huge deal overall. This then causes a huge delay in the supply that’s going out to the global market. The knock-on effect is likely to be a 10% decrease in supply for the next one to two months.

To help buyers understand more about how this is affecting NAND flash procurement, take a look at this short video.

Traditional PCs

Global PC shipments enjoyed a 1.5% YoY growth to 62.97m units in Q2 according to Gartner. By vendor, Lenovo topped the market with 15.9% YoY growth to 15.77m units meaning they claimed 25% of the market, ahead of HP (+2.6% to 13.99m and 22.2%), Dell (+2.1% to 10.65m and 16.9%), Apple (-0.2% to 3.71m and 5.9%) and Acer (-9.9% to 3.1m and 4.9%).

The firm also predicted that global device shipments – including PCs, ultramobiles and mobile phones – will drop 3.3% YoY in 2019 to 2.2bn units, continuing to fall 3.8% YoY through to 2.15bn units by 2021. It predicted that traditional PCs will drop from 195.3m units shipped in 2018 to 187.2m in 2019 and 171.2m by 2021.

Premium Ultramobiles & Wearables

Premium ultramobiles are expected to enjoy YoY growth from 69.8bn units shipped in 2019 to 81.4bn by 2021. Basic and utility ultramobiles on the other hand will drop from 146.1m units to 142.4m by 2021.

Monthly statistics

The number of new products that came onto the market was relatively modest, with a spike on July 22 at 25,829 new products launched compared to only 237 new products launched on June 18.

The highest number of total price increases happened on July 22, with 65,142 price hikes occurring across a variety of product categories. At the opposite end of the scale, there were 31,164 product price decreases across three days between July 19 and 21.

 

 

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