Research Updates

London, 21 February 2023 - Notebook and desktop unit sales plunged in the first four weeks of 2023, falling by -44% and -23% year-on-year respectively, on the back of low consumer confidence and muted business investment, according to CONTEXT, the global IT market intelligence company.

Revenues also fell sharply as a result of the drop in demand driven by the economic climate, geopolitical uncertainty and the cost-of-living crisis. Education deals have also dried up since last year, making comparisons unfavourable.

The amount of excess stock held by distributors across Europe has fallen from a high of 20-30 weeks' worth six months ago to around 10 weeks now - but this is the result of promotions and heavy discounting in the second half of 2022. Alongside ageing stock, there is still a glut of low-end notebooks in some places, and the cost of inventory is rising everywhere. It is unsurprising, therefore, that distributors trying to avoid a repeat of last year's overstock are sometimes reluctant to take on new products.

SMB channel hit hard

All channels are starting 2023 with revenues and sales much lower than those of the previous two years, but the biggest difference in notebook revenues is in the SMB channel as smaller sellers are more acutely affected by rising costs - not least of energy - and are having to think about cash flow more carefully during the current downturn.

The gap in revenues from notebooks is not as wide for retailers and etailers, reflecting a stronger-than-expected drop in demand in commercial sales since the end of 2022. 

Germany weak

There has been a particularly weak start to 2023 for notebook revenues in Germany where consumer confidence is low and businesses cautious. There have also been very few education sales there, whereas, in Spain, Q4 activity in this sector has spilled over into 2023 leading to a better January. We expect there to be more deals for education notebooks sales in both Spain and Italy in the first half of the year.

Cause for optimism

Revenues from Windows systems have seen a downward trend since the start of the year, but those from Apple systems have recently rallied off the back of new products: some 16,000 M2 Pro-based MacBook Pros were sold at an average of around � per SKU in January. Chrome revenues are down in line with demand from the education sector, and we expect this gap to continue throughout the year.

The drop in PC sales is to be expected given that the economic downturn is worse than was anticipated a year ago. The volatile geopolitical situation is causing businesses to pause investment while consumers continue to suffer from inflation and high energy prices. However, there's still room for optimism: we can expect product refreshes and pent-up demand to pick the market up by the end of the year, and in particular in the course of 2024.

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London, 17 August 2022 - The number of PCs sold declined almost -14% year-on-year in Q2 2022 with sales of mobile computing devices, notebooks, workstations and tablets slumping by -15% and those of desktops by -7%. Despite this, revenue held up well, falling by only -4% which is towards the optimistic end of the range predicted by CONTEXT, the IT market intelligence company.

The latest CONTEXT Forecasting Report predicts that sales will continue to drop as spending on mobile devices returns to normal after the pandemic and the geopolitical situation continues to have an impact. CONTEXT expects education and consumer demand to be significantly lower than last year, which matters because education was particularly strong in 2021. Business sales will also suffer but to a smaller extent. While supply has greatly improved over the first half of this year - and will continue to do so - it is not expected to recover fully.

CONTEXT notes an excess of entry-level stock in the business and consumer markets so expects distributors to reduce prices to try and move stock out, as they did at the end of Q2. At the same time, there are still product gaps at the high end of the business market - thanks to missing components and logistics difficulties - which are making planning difficult and uncertain for many companies.

Even so, the assumption is that growth in the second half of this year will be better than in the first half because of an easier year-on-year comparison and the fact that at least some excess stock will be sold out. 

Pessimistic scenario

Confidence and demand are low and mobile computing stock levels remain high, making sell-through harder. There are only isolated pockets of growth and any investment goes to mobile, rather than desktop computing.

Optimistic scenario

Demand improves as offices reopen, although it remains susceptible to pricing of mobile computing devices. Supply at the high end of this market segment improves and momentum builds as desktop installations are refreshed.

London, 28 June 2022 - Anticipation of a bumper summer of events could drive growth in revenues from sales of large-format displays (LFDs) as high as 35% year-on-year in Q2, according to CONTEXT, the IT market intelligence company.

CONTEXT's latest IT channel briefing report discusses factors that have affected sales of monitors and LFDs through European distributors, including the aftershocks of the pandemic that will continue to have an impact for the rest of the year.

Growth in the consumer market is negative for the first time in 24 months as gamers and other would-be buyers spend their money on other things, leading to a supply glut. In the coming months, rising inflation may also begin to reduce consumer demand. As offices reopen, it is the commercial market which is driving overall sales - although supply chain issues, component availability and expensive logistics costs are still pushing up prices and delaying lead times.

There is little innovation in the consumer market: higher resolutions, bigger screens and higher refresh rates account for most of the changes in new models. On the business side, manufacturers are looking at products such as USB-C docking monitors to support the new trend for hybrid working.

The numbers for Q2

The good news is that revenue from displays and LFDs is likely to grow by double digits in Q2 even with unit sales stumbling. A pessimistic forecast - based on a scenario where component shortages persist into the second half of the year, consumer demand declines significantly, lead times increase and ASPs drop as demand for gaming monitors sinks - would see unit sales of monitors decline by 6.7% year-on-year in Q2 2022 but revenue increase 14.3% over the same period. For LFDs there's a brighter forecast: unit sales growing by 22.4% and revenue sales surging by 24.8%.

CONTEXT's optimistic scenario assumes an increase in the availability of business products, recovering consumer demand and the product mix shifting towards more expensive models. That would see unit sales of displays grow by 1.2% year-on-year in Q2 and revenues by 22.7%. For LFDs, the positive scenario also means a tilt towards more expensive products as the impact of the pandemic reduces and the prospect of summer events encourages more investment. Should that happen, CONTEXT predicts unit sales increasing 33% and revenue growth hitting 34.9%.

London, 28 June 2022 - Anticipation of a bumper summer of events could drive growth in revenues from sales of large-format displays (LFDs) as high as 35% year-on-year in Q2, according to CONTEXT, the IT market intelligence company.

CONTEXT's latest IT channel briefing report discusses factors that have affected sales of monitors and LFDs through European distributors, including the aftershocks of the pandemic that will continue to have an impact for the rest of the year.

Growth in the consumer market is negative for the first time in 24 months as gamers and other would-be buyers spend their money on other things, leading to a supply glut. In the coming months, rising inflation may also begin to reduce consumer demand. As offices reopen, it is the commercial market which is driving overall sales - although supply chain issues, component availability and expensive logistics costs are still pushing up prices and delaying lead times.

There is little innovation in the consumer market: higher resolutions, bigger screens and higher refresh rates account for most of the changes in new models. On the business side, manufacturers are looking at products such as USB-C docking monitors to support the new trend for hybrid working.

The numbers for Q2

The good news is that revenue from displays and LFDs is likely to grow by double digits in Q2 even with unit sales stumbling. A pessimistic forecast - based on a scenario where component shortages persist into the second half of the year, consumer demand declines significantly, lead times increase and ASPs drop as demand for gaming monitors sinks - would see unit sales of monitors decline by 6.7% year-on-year in Q2 2022 but revenue increase 14.3% over the same period. For LFDs there's a brighter forecast: unit sales growing by 22.4% and revenue sales surging by 24.8%.

CONTEXT's optimistic scenario assumes an increase in the availability of business products, recovering consumer demand and the product mix shifting towards more expensive models. That would see unit sales of displays grow by 1.2% year-on-year in Q2 and revenues by 22.7%. For LFDs, the positive scenario also means a tilt towards more expensive products as the impact of the pandemic reduces and the prospect of summer events encourages more investment. Should that happen, CONTEXT predicts unit sales increasing 33% and revenue growth hitting 34.9%.

London, 08 September 2022 - Revenue from sales of laser multi-function printers (MFPs) through European distributors have been driving the imaging market in Q3, according to CONTEXT, the IT market intelligence company.

CONTEXT's depth of data enables it to offer unique analyses of the European IT distribution channel. Its Revenue Trend Index (RTI) plots performance using the 2021 average weekly revenue as a baseline which is assigned a value of 100. It shows 2022 business printer sales peaking in Week 30 with an index score of around 115 thanks to demand from public tenders, the opening of new offices and office refurbishments in several countries. 

High-end laser devices, in particular MFPs, were behind much of this increase: revenues from inkjet MFPs and single-function printers (SFPs) were below the baseline. Laser MFP revenues began to rise above the index baseline in Week 28 and reached a value of 125 in Week 30. Although this has since fallen, revenues from the category remain well above the baseline and have also outperformed the same period in 2020.

ASP increases drive revenue growth

Business sales of laser devices rebounded in most major European countries, with performance in Germany, Italy and Poland being particularly strong due to solid sales of both mid- and high-end devices. This pattern indicates strong demand from organisations small and large.

Price increases and a shift in product mix have helped to keep revenues growing. Vendor list prices and distributor Average Selling Prices (ASPs) for models aimed at consumers and businesses rose steadily during August with vendor Average List Prices reaching nearly � for consumer printers and € 555 for business devices at the end of the month. Increased sales of high-end consumer devices contributed to rising distributor ASPs after the June/July slump caused by promotional offers to clear excess stock of entry-level printers.

London, 25 August 2022 - Unit sales of print hardware declined sharply year-on-year in Q2 2022 with lower demand, especially for consumer printers, and falling sales of entry-level and high-end business printers, according to CONTEXT, the market intelligence company.

Revenues held up a little better, due to increased Average Selling Prices (ASPs), sales of more expensive consumer models and the purchase of mid- to high-priced business devices for newly reopened offices. Both figures were very close to the forecast made in CONTEXT's Q2 forecasting report. 

Declining ink cartridge sales led to a sharp drop (of 18%) in unit sales of consumables but a lower fall (only 7%) in revenues from this sector of the market. CONTEXT's pessimistic-scenario forecast was spot on in terms of these revenues, although sales were significantly worse than anticipated. 

Demand is softening as life returns to ‘normal' after the pandemic. Markets are approaching saturation, there is no longer the urgency created by the crisis, and high inflation is sapping consumer demand. However, promotions designed to reduce inventory excess are likely to support sales of consumer devices during Q4 and into the beginning of next year, according to the CONTEXT Forecasting Report Q3 2022.

Individuals and organisations are choosing products more carefully, and distributors and vendors are focusing on growing sales to businesses, particularly Small and Medium Businesses (SMBs). Although ink sales are falling, toner sales are increasing thanks to the return to the office which will be the main driver of the printer market for the rest of the year and during the first half of 2023. This return could also mean Managed Print Services are primed for a comeback over the next six to twelve months. 

The supply chain is still a key factor. While overall demand is declining slightly and supply is improving (meaning that backlogs which CONTEXT has seen building up in the last year are getting smaller), high-end multifunction business printers are still being hit by delays that are expected to last until at least the end of the year. Global shortages have left businesses competing for the same raw materials, and some key components remain in short supply. The combination of price increases, supply pressures and continuing transportation issues will not be alleviated anytime soon. 

A potential vendor shift to other go-to-market routes, including online sales (either directly or through resellers) is likely to have an impact on distributors. 

Finally, growing environmental concerns leading to public- and private-sector adoption of paperless policies are having a negative impact on the printer industry, and this will only build over the years to come.

London, 30 October 2023 -  European distributors saw enterprise networking revenues for the four weeks to Week 40 2023 grow 3.4% year-on-year (YoY) while those from servers and storage declined sharply (by -45% and
-33.5%, respectively) according to CONTEXT, the global IT market intelligence company.

These latest figures highlight the diverging fortunes of the three main enterprise categories.

Switching was the standout segment: revenues from these products surged 13% YoY, offsetting a -24% fall in those from wireless devices which may, in part, be explained by sales returning to normal after the backlog fulfilments that have been driving up revenue since summer 2022. There were also significant backlog sales of servers in Q3 and Q4 2022 and these unfavourable comparisons led to volume sales falling -36% YoY and contributed to the drop in revenue growth for these products. However, revenue growth was also lower than in 2021 shows the added effects of weak demand and falling prices for components such as RAMs and SSDs.

On the enterprise storage side, both storage arrays and Hyper Converged Infrastructure (HCI) performed poorly in these four weeks due to economic uncertainty and high interest rates depressing demand. The relatively steep decline in SSD prices since the start of 2023 also played a part. The good news is that we hear manufacturers have cut back production so this may not be a factor as we move into 2024.

Country by country

While revenues are falling across most of the region, southern Europe is an exception. Networking revenues were up 40% YoY in Italy, driven by 61% growth in the switching segment. At the other end of the spectrum, revenues in Germany fell below 2021 levels for the first time this year thanks to flat networking performance and major drops in server and storage sales.

The recent win for the liberal coalition in Poland could signal the release of EU funds which would then have a significant impact on distributor sales. Although sales here in 2023 to date have been rather soft compared to the European average, things have improved recently and there has been a 10% growth in revenues for the four weeks to Week 40.

Overall revenue growth for Q3 as a whole was below even our pessimistic forecasts in all three enterprise categories. Soft demand continues to impact enterprise networking revenues and reduced datacentre investment across Europe, and falling component prices are hitting server sales. However, when considering these figures, it is important to remember that backlogs artificially inflated server revenues in Q3 2022 making the comparison unfavourable.

To access the full forecast, please request the report here.

CONTEXT analytics, forecasts and data management solutions are embedded in the information systems of the world's major technology companies. CONTEXT processes over $200 billion of sales transactions every year for the global ITC Channel, with a team of more than 400 staff operating worldwide from London, Berlin, Paris, Madrid, Milan, Warsaw, Johannesburg, Istanbul, Dubai, Chicago, Buenos Aires, São Paulo, Mumbai, Auckland, Singapore, Seoul, Taipei and Tokyo.

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London, 11 September 2023 -  Reduced business investment had a major impact on distributor sales of enterprise server and storage in Q2 2023 and is likely to continue dragging revenue growth down until 2024, according to CONTEXT, the global IT market intelligence company.

CONTEXT's Q3 2023 channel forecast report reveals that server sales revenues slipped from growth of 37.2% year-on-year (YoY) in Q4 2022 to a YoY increase of only 3.8% in Q1 2023 and then fell by -11.7% in Q2. Growth in distributor revenues from storage sales tumbled from 17.3% in the first quarter of this year to -9.5% in the second. Both these Q2 figures are significantly lower than CONTEXT forecasts: in even the most pessimistic scenario, YoY growth of 1.6% for servers and 4.5% for storage was expected.

Following this trend, it seems like CONTEXT's pessimistic forecasts for Q3 are likely to be more accurate. These anticipate a further slump in sales leading to another quarter of declining growth: server revenues are expected to be down -28.9% on 2022 and those from storage sales -14.6% lower. The latest predictions for revenue growth over the year as a whole now stand at -18.4% to -13% for enterprise servers and between -5.6% and -0.8% for storage.

The war in Ukraine, high living costs, and surging interest rates that increase the cost of capital have led to business confidence sinking - not just in the EU but also in China and the US. This has had a significant impact on distributor revenues from sales of enterprise servers and storage. However, as the economic outlook brightens, we're hopeful that performance across both markets will begin to improve by the start of 2024.

Even so, macroeconomic uncertainty is likely to remain a drag on business demand for servers and storage for the rest of this year. Unflattering comparatives from 2022, when the clearing of backlogs pushed up revenues, will also make growth this year difficult. And shortages of AI-ready components, even as overall supply normalises, is another potential problem. However, product refresh cycles, a ramping up of corporate digitalisation plans, and sustainability initiatives could make for a more positive 2024.

To access the full forecast, please request the report here.

CONTEXT analytics, forecasts and data management solutions are embedded in the information systems of the world's major technology companies. CONTEXT processes over $200 billion of sales transactions every year for the global ITC Channel, with a team of more than 400 staff operating worldwide from London, Berlin, Paris, Madrid, Milan, Warsaw, Johannesburg, Istanbul, Dubai, Chicago, Buenos Aires, São Paulo, Mumbai, Auckland, Singapore, Seoul, Taipei and Tokyo.

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