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 up to date with the latest developments and help support your purchasing decisions.

Nearly two months after Brexit was announced and there remains a heavy fog of uncertainty. Predictions keep rolling in on how Britain’s EU exit will impact the tech industry. Gartner, for instance, has forecast that IT spending will be flat this year with 0% YoY change at $3.41 trillion. This was largely based on the analysts’ prophecy that the UK will not follow through with its Brexit vote.

In turbulent times like these, it’s important that IT buyers closely monitor market trends in order to analyse patterns and assess where, when and why price hikes might occur. Having this knowledge gives buyers the confidence to negotiate the best possible prices.

Exchange Rates

Against the pound, the euro started out at 0.8356 in July before jumping to 0.8555 on July 7. It then dropped to 0.8329 by July 15 before experiencing some turbulence throughout the rest of the month. The euro recovered slightly at the end of the month finishing slightly up from where it had started at 0.8443.

The euro had a similar series of ups and downs against the US dollar in July. The euro started out last month at 1.1115 rising to 1.1136 by July 4 before falling to 1.1046 on July 9. From there it rose to 1.1110 on July 14, falling again before hitting its monthly low of 1.0971 on July 23. It managed to rally towards the end of the month reaching a high of 1.1170.

What triggers were at play to cause the Eurozone to react? Inflation rose to 0.2%, up on 0.1% in June, while banks continue to roll out stress testing amid fears of Italy being the next euro crisis. Amid this backdrop, Brexit continues to slow any hopes for global stabilisation.

Traditional PCs

The PC market in Western Europe stablised during the second quarter of 2016 with just a -0.8% YoY change. This contributed to the EMEA’s better-than-expected Q2 results of 16.1m units shipped.

IDC produced a PC report on the EMEA region which noted that HP held on to the top spot during the second quarter with a 25.4% market share and a 4.2% YoY shipment increase to 4m units. Coming in second was Lenovo with 19.4% market share and a 7.1% shipment drop to 3.1m units. Third place went to Dell with an 11.9% share and 1.9m units shipped, down 7% YoY.

Last month, I warned about the potential for manufacturers and distributors to raise their prices in the wake of Brexit. Lenovo was just one vendor to do this as it confirmed it will be pushing prices up by 10% in the UK due to the falling value of the pound.

While vendors must protect their profit margins, IT buyers would do well to keep an eye on the market and ensure that uncertainty in the market is not used by suppliers as an excuse for charging inflated margins.

Phones and Tablets

Global smartphone production volumes reached 315m units in Q2, up 8.9% on Q1 and 3.2% YoY, according to TrendForce. Meanwhile, IDC noted smartphone shipments reached 343.3m units, up 3.1% on the quarter and just 0.3% on Q2 2015.

While Apple’s iPhone production increased 13% on the quarter to 48m, ComputerWorld reported that its sales tanked for the second quarter in a row with 40.4m iPhone units sold in Q2, down from 47.5m units in Q2 2015. Apple’s sales were also down across the range with the iPad dropping around 10% YoY to 10m units.

Printers

IDC reported that nearly $1b will be invested in 3D printing in the Central and Eastern European area alone in 2016. The $917m investment includes hardware, software, services and materials. By revenue, IDC says the market will grow at a 28% compound rate to $2.3b by 2020.

Finally, in a report from Context, the global 3D printer market grew 9% in Q1 2016, while the industrial printer market fell 20% in shipments YoY.

 

Stat of the month: Very few products were released on to the market in July. The largest amount in a single day was 35 products on July 14.

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