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.

Whatever size of business you are, whatever sector you’re working in, the looming EU Referendum has gotten everybody fretting as companies up and down the UK weigh up the pros and cons of a possible Brexit.

The sense of anticipation in scenarios like this can have a dramatic effect on already volatile markets like IT. Crucially, it can cause exchange rates to move as markets respond to a potentially impactful situation.

Here, Al Nagar continues his series of 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.

Exchange Rate

At first glance, March appeared to be another month of turmoil for the euro. But a closer look saw the euro enjoy a strong finish against the pound. Starting the month at 0.7795 it dropped to 0.7725 on Mar 3 before staggering for a week. Three significant increases then followed – first to 0.7750, then to 0.7857 on March 16, followed by a monthly high of 0.7912 on March 24. The euro then fell again, only to be saved by a sharp rise from 0.7851 on March 29 before finishing the month at 0.7902.

Similar to the pound, the euro saw significant gains against the US dollar, rising gradually throughout March, with only a few negative movements. Starting at 1.0872 it quickly fell to a monthly low of 1.0859 on March 2. From there, it saw gradual increases for the rest of the month reaching 1.1152 by March 11 and then up to 1.1294 on March 18. A sloping fall to 1.1162 during the third week of the month then occurred before recovering to 1.1355 at the end of the month.

A flurry of reports suggests that confidence in the euro is the weakest it has been for a year, despite the fact that unemployment is falling. Uncertainty around the UK’s referendum on exiting the Eurozone is largely to blame, stalling many regional markets.

Phones and Tablets

With the first quarter of 2016 now behind us, analysts had an opportunity to pass comment on the state of play in 2016. Interestingly, IDC reported that 2015 will be the last year of global double-digit smartphone shipment growth with a modest 5.7% YoY growth predicted, to 1.5b units in 2016. The trend is expected to continue for the next four years, reaching 1.92b units by 2020.

2015 seemed to be the ‘year of the phablet’ – a product that accounted for 20% of last year’s smartphone market. Growth is expected to reach 32% by 2020, totalling 620m units. Android is also expected to enjoy a bumph, growing to 1.62b units in 2020 and increasing its share of the smartphone industry from 81% to 85%. Apple’s iPhone also had a great year in 2015, growing 20.2% from 2014 to 231.5m shipped units. Windows was less fortunate, hitting a shipment decline of 18% to 29.2m units.

A report on tablets from IDC expects global tablet shipments to fall to 195m units in 2016, down 5.9% compared to the previous year. Beyond 2016, tablets are expected to bounce back to single-digit growth, pulled upwards by the growing popularity of detachable hybrid devices.

Traditional PCs

The PC market continued to look for stability in a troubled market. According to a forecast by IDC, notebook shipments will reach 156.2m in 2016 and enjoy just a 0.3% (compound annual growth rate) CAGR through 2020 reaching 158.2m units. Desktops will drop from an expected 104.7m units in 2016 to 96.1m (-1.7%) in 2020. This all culminates in a 0.5% overall decline in the number of PC units shipped.

ABI Research offered a different take on the market, suggesting that, despite declining volumes, PC platforms are evolving – not dying – with Chromebooks and ultraportables driving growth over time. In its recent report, it predicts that, while laptops will drop 2.8% in 2016, Chromebooks will enjoy a 21.2% increase to 7.6m units. Much of this can be attributed to a demand in the education market, with particular growth now coming from Western Europe.

Stat of the month: The largest number of price increases happened on March 23, with 23,084 in a single day. 

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