Research Updates

London, 05 May 2020 – Volume sales of PCs through Western Europe’s largest distributors increased by +17.5% year-on-year in the first quarter of 2020 as a surge in demand for remote-working equipment during the last month of the quarter pushed PC growth, according to the latest data published by CONTEXT, the IT market intelligence company.

PC sales increased by +7.6% in January, +13.2% in February and +31.8% in March, when stricter measures to contain the spread of coronavirus across Europe led to a dramatic rise in remote working.

Over the full quarter, the increase was greater for business-targeted products: sales of these were up by +22.8% year-on-year compared to +9.4% for consumer-targeted PCs. The most sought-after devices were notebooks – up +18.4%, as a +23.6% rise in the commercial category was supported by a +12.3% increase for consumer systems. Desktop sales were up by +15.3% overall with a +22.7% growth in sales of business-targeted devices more than compensating for a fall of -2.7% in consumer sales.

The unexpected surge in demand for devices suitable for home working seen in March has led to a significant reduction in notebook stock across most Western European countries. With incoming supply also disrupted by manufacturing and logistics issues, distributors have been using existing – and often even ageing – stock to fulfill orders and have reported a growing order backlog. Consequently, while the March spike in demand is likely to soften, sell-through during April is set to stay healthy as the channel works on reducing this backlog.

The impact of the current crisis on PC demand throughout the rest of the year will depend on the duration of lockdown measures and the effect these have on European economies. Longer term, the crisis is likely to accelerate digitalisation efforts across a number of sectors now that, for many organisations, the ability to provide a secure infrastructure for remote working is no longer a “nice-to-have” but an economic necessity.

                            Y/Y PC volume growth: Western European distribution

                                  PC sales: Western European distribution

London, 26 May 2020 – In April, volume sales of notebooks through Western Europe’s largest distributors maintained their momentum and increased by +46% year-on-year while sales of desktops dropped by -32%, according to the latest data published by CONTEXT, the IT market intelligence company.

Growth in notebook sales reached +45% in March, when strict measures to contain the spread of coronavirus across Europe led to a rise in demand for devices to facilitate remote-working and home-schooling. This unexpectedly high demand, coupled with disruptions to supply, left distributors with a growing order backlog. In April, as supply improved, the channel was able to work on fulfilling orders – leading to another month of high sales and the +46% growth noted above. The increase was primarily driven by commercial laptop sales: these were up +70% whereas those of consumer notebooks increased by +20%.

The picture was very different for desktop computers. During April, sell-through in this category dropped by -32% year-on-year. While demand suffered from customers shifting their focus to mobile solutions in response to the current crisis, last year’s good performance also had an impact on the year-on-year comparison: it was at exactly this time in 2019 that desktop sales began to increase as a result of commercial Windows 10 migration demand. An increasingly high baseline for year-on-year figures, combined with the expectation that desktop demand will remain weak, means this trend is likely to continue throughout Q2.

While the recent spike in demand for notebooks will end, the devices will remain central to future sales as organisations across many different sectors rethink the ways they handle home- and flexible working, and digitalisation increases.

                        Y/Y PC volume growth: Western European distribution

                         PC volume sales: Western European distribution

London, 29 May 2020 – Sales of large-format displays (LFDs) were already being affected by the Covid-19 pandemic before a dramatic drop in early Q2 2020, according to the latest data published by CONTEXT, the IT market intelligence company. This decline reflected the effects of lockdown measures as these devices are heavily used in public settings. On the positive side, digital signage has the potential to support the safety-conscious ‘new normal’ in a range of spaces. If indications that the pandemic is now being brought under control are accurate, and if lockdowns can be released safely, it is reasonable to hope that the category will recover with renewed confidence in its ability to make a difference to business and wider society.

After a strong 2019, where sales growth was in double figures, there was significant slowdown in LFD sales over Q1 2020 with a total decline -1% year-on-year. This was due not only to the spread of Covid-19 in Europe but also to factory closures in Asia during the early days of the pandemic. That said, there was one sub-category which continued to do well in Q1: sales of interactive models, which are used for office collaboration and classroom teaching, were up by +14%. However, this too ended in early Q2 as widespread lockdowns across Western Europe (WE) led to a dramatic decline across the entire sector.

      Y/Y large format displays (LFD) volume growth: Western European distribution

Total sales of LFDs designed for digital signage, public information or collaboration declined by 46% year-on-year in the first five weeks of Q2 2020, affecting all vendors and almost every country in WE. It will take time for these losses to be recovered. Large-scale events have been postponed and demand for LFDs for indoor applications has fallen – we need desktop monitors, not boardroom screens, for school students and office workers now based at home. Transport, hospitality, and bricks-and-mortar retail – all important verticals for LFDs – have suffered. Fewer commuting office workers means a smaller audience on transport networks. Moreover, the future of the communal touchscreen is in question: except in a few specialist applications, convenience will not survive anxiety about hygiene and shared surfaces. It will be interesting to follow how vendors adapt and rise to the challenge of creating alternatives to touchscreens.

Despite the difficult environment, there are opportunities for the LFD industry as lockdowns gradually ease, societies begin to reopen, and the world finds out what the new normal will be. Digital signage can help public spaces adapt to the need for social distancing, thanks to its ability to convey clear messages at the same time as offering the options of personalisation and adaptability. Even where strict lockdowns remain, it can reach consumers in outdoor spaces used for exercise and support online sales while shops are still closed. As LFDs are set to help us reintroduce some of our day-to-day activities whilst enabling us to keep a safe distance, the sector has a good chance of making a full recovery – especially if current opportunities to innovate and contribute are fully realised.

London, 29 May 2020 – A spike in consumer printer demand during Covid-19 lockdowns has helped overall sales through European distributors grow by 2.2% year-on-year in the first 18 weeks of 2020, according to CONTEXT, the IT market intelligence company.

      Graph 1: Printer volumes and Y/Y change by category – European distribution

The latest data indicates that, although not as essential to home working and studying as products like computers and headsets, printers became more popular in March and April as households began to see the value of having a device at a time of mass school and office closures.

Consumer unit sales across Europe spiked by 72% year-on-year in week 14 (ending April 5) and by 52% in week 12 (ending March 22).

However, although the etailer consumer and retail channels accelerated their purchasing in Q1 2020 due to concerns over supply instability, revenues fell by -10.6% year-on-year. This was due to falling ASPs and a greater focus on consumer products (cheaper entry-level and mid-range models) than in the same period last year.

In fact, consumer printers dominated the first 18 weeks of 2020, accounting for 64% of sales and growing by +11.7%, while unit sales in the business segment fell sharply at -14.4%.

Brother (+33%), Canon (+18%), HP (+17%) and Epson (+11%) saw significant year-on-year sales increases in the consumer space as a result, although most brands benefitted, while in the commercial space just four vendors saw double-digit growth: Brother (+17%), Canon (+16%), Xerox (+14%) and Epson (+10%).

             Graph 2: Y/Y change in printer sales by segment – European distribution

Inkjet MFPs and SFPs were the winners: European distributors sold more of these models in almost every single week than at the same time in 2019. A shortage of consumer printers also forced many buyers to purchase entry-spec business inkjet MFPs, driving up revenues.

Overall inkjet sales have risen 30% year-on-year due in part to ink-tank models that are appealing to consumers looking for more durable home essentials.

           Graph 3: Y/Y change in inkjet sales by function – European distribution

Laser printers have had a less successful year thus far, with neither the business nor the consumer segment matching 2019 performance. Overall sales during the first 18 weeks of 2020 were down by -7.2% year-on-year (and revenue by -17.5%), mainly due to falling business demand. However, sales of laser MFPs aimed at consumers grew by +29%, driven mainly by cheaper models of up to €150.

      Graph 4: Y/Y change in laser printer sales by function – European distribution

The story in each of the major Western European countries was slightly different, and it reflects differences in the timing and nature of measures implemented by Governments to control the spread of the virus. Only Spain recorded unit sales and revenue growth, with most countries showing declining revenues even as volume sales increased.

Table 1: Imaging units sold and revenue: Y/Y change For W1–W18 2020 – European distribution

Although there is no sign of recession, a prolonged lockdown across Europe could leave vendors and distributors with excess inventory, especially business laser printers.

London, 24 June 2020 – In May 2020, the consumer print market dominated (inkjet MFPs continued to shine, with sales driven by low-cost consumer models), and business spend continued to suffer, according to the latest data from CONTEXT, the IT market intelligence company. The shift towards consumer sales has been dramatic and sudden. Now, with lockdowns easing, distributors should be prepared for the market to move in the opposite direction.

Graph 1: Printer volume Y/Y change by category – WE distribution (May 2020)

Overall volumes held steady year-on-year, although results varied by country. There were marked declines in revenue, mirroring falling business sales. Revenues fell by -40.1% in France and by -27.2% in the UK. Revenues in Spain and Italy fell by -6.9% and -5.7% respectively. The revenue split in May this year was 58.9% business to 41.1% consumer, compared to 73.1% business and 26.9% consumer in May last year (there are 2 more working days last year compared to this year). In normal times, revenue figures favour the business sector because of the fewer, bigger investments that businesses make. This hit to the business share will gradually reverse once business demand is back, and once excess stock has moved through to final customers.

Graph 2: Printer revenue share by targeted-customer segment – WE distribution

Sales to consumer channels held steady, and sales to business channels fell. Unit sales to corporate resellers dropped by -39.4% year-on-year, and sales to etailers focused on serving businesses were down -28%. Sales to consumer channels were up by +2.2% for retail chains and +11.2% for consumer etailers, as lockdown working encouraged consumers online to refresh home equipment. In this consumer-driven market, inkjet MFPs did well; the coronavirus lockdowns challenged other categories, particularly sales of business laser devices. The changes are likely to have generated an excess of inventory in the channel, and we may see promotions as more normal activity restarts.

Although the situation varies by country, the trends over the last couple of months are clear: consumer inkjet MFPs are performing well, business spending is down, and the market has shifted towards consumer printers. As offices begin to reopen, distributors should be anticipating a rebound in business sales in the second half of the year.

London, 07 April 2020 – The Enterprise market has been slower to react to the coronavirus crisis than the PC and AV-system markets – as early as February, resellers were stockpiling products in anticipation of supply disruption. However, it is possible to see the effects on the Enterprise sector in the Western Europe (WE) IT distribution channel now that numbers for week 12 have been included in the latest data published by CONTEXT, the IT market intelligence company.

                                    UC and collaboration revenues: Y/Y    

As expected, the UC and collaboration segment – which includes business communication and collaboration products such as VOIP systems, headsets and cameras – is performing well, boosted by the growing numbers working from home. As the graph above shows, the gains of week 11 accelerated in week 12, and we are expecting this trend to continue into April.

                                   Network management and security: Y/Y

Network management and security – the category that includes VPNs, gateways and firewalls – is also on the up as businesses update their networking infrastructure to enable their employees to work from home. This is especially true of SMBs, many of which did not previously have the infrastructure in place to allow remote working. The change is even more noticeable given that this segment of the market had been in constant decline throughout 2019 and into January 2020.

                              Virtualisation and security software revenues: Y/Y

The current situation is also proving positive for the Enterprise software segment, with virtualisation and security software benefitting. The need for more endpoint security licenses, networking security licenses, and virtual machines is pushing up sales in those categories.

                                                Infrastructure units: Y/Y

The other side of this story is the reduced demand for IT infrastructure as confinement and lockdowns have an increasing impact on sales with those of servers and network switches showing more marked signs of decline in week 12. However, confirmation of whether or not this is a real trend will come in the next few weeks – the end of the quarter could bring a few deals that make up the loss. Even so, business closures are leading to a marked break in infrastructure investment. For example, we understand that resellers in Southern Europe cannot reach their traditional clients who are closing or, at best, re-focusing their resources into managing the crisis rather than investing in IT infrastructure. We are also seeing the same decline in demand for wireless infrastructure as offices empty and the installation of wireless access point networks is delayed or cancelled.

Looking forward, software and collaboration products should continue to thrive, and businesses are also likely to need more networking equipment to enable and optimise homeworking. Conversely, there is a worry that demand in the infrastructure segment will slow further as the confinement rules remain at the current levels.

London, 19 June 2020 – The market for servers in the European IT distribution channel is on the up, according to the latest data published by CONTEXT, the IT market intelligence company.

                      Server Y/Y Revenue Growth (rolling 4 weeks): Europe

Revenues from the server market, which includes server systems and upgrades, have returned to pre-COVID-crisis level in the latest weeks. However, the picture is more nuanced when looking at country level.

                                 Server Y/Y Revenue Growth (rolling 4 weeks)

Sales are catching up well in Germany, Italy and Spain and have entered positive growth territory. Indeed, Spain and Italy are positively growing in Week20, which includes Week17 to Week20 revenues as a rolling 4 weeks, with respectively +2.4% and +9% year-on-year revenue growth while Germany is showing +10.6% increase on the same period. Meanwhile other countries are lagging behind. There are no signs that distributors in France and the UK have seen transaction pick up of the last few weeks with the former declining by -37.9% in Week20 and the latter showing a revenue reduction of -34%. This is not completely unexpected as, traditionally, a smaller proportion of infrastructure business in these markets goes through the distribution channel.

                                Server Y/Y Revenue Growth (rolling 4 weeks)

The CONTEXT corporate reseller panel shows strong server sales over the last month in these 2 countries offsetting, to some extent, the negative impression of recovery given by looking at the distribution channel alone. Week18 revenues, which includes Week15 to Week18, grew by +14.6% in France and by +33.6% in the UK compared to the same period last year. In those 2 countries, infrastructure sales tend to go more heavily through tier-one corporate resellers, and those resellers also quite often deal with large and more complex infrastructure projects. As lockdown eases, larger organisations are back to business as usual whereas smaller companies have been slower to resume operations and this could go some way to explaining the difference in sales pick-up between distribution and tier-one corporate channels. Corporate resellers in Germany and Southern Europe tend to buy from distributors (around 80% of corporate reseller business in Spain goes though the distribution channel) which is why COVID recovery is much more visible in the distribution-channel data for these countries.

Therefore, if we use a multichannel perspective, we can say with confidence that the server market in Europe is in a post-COVID phase. Distributors in France and the UK still have some catching up to do but this should happen in the next few weeks as lockdown measures are eased further and the market continues to see the positive impact of projects put on hold being resumed. However, since industries such as retail, hospitality and tourism will be working at only half capacity for the next few months, we should not expect a boom in infrastructure sales any time soon.

London, 13 February 2020 –The Industrial/Professional printer market (that is, for all printers above $5,000), has seen a +8% rise in polymer material utilisation over the last twelve months. Within polymers, photopolymers have seen the most significant near-term growth with volume used and revenues generated from use both seeing growth of +21% over the trailing twelve months (TTM) through to Q3 2019. For thermoplastics, although the overall increase in utilisation was up only +6% for the period, the powder-based side of this market saw good growth thanks mostly to a rising installed base of HP multi-jet fusion machines across the globe.

Charts 1 and 2: Global material utilisation by Industrial/Professional printers Trailing-Twelve-Months (TTM)

For Photopolymers, while there is an underlying increase in material utilisation as the market shifts from one principally focused on prototyping to one where mass production is also a key usage, near-term increases in material sales were more the result of a growing base of installed printers for traditional 3D printing uses. One such market which has traditionally embraced 3D printing for its unique ability of mass customization (that is, tweaks to each individual product manufactured) is dentistry. Photopolymer utilisation for this historically strong dental sub-sectors was particularly strong in the TTM to the end of Q3 2019, seeing a +29% increase in throughput. Increased photopolymer utilisation was also supported just in general by the accelerating installation of vat photopolymerisation printers in the TTM to Q3 2019 which were up +28% from a year before.  Strong sales of all price-classes* of Industrial/Professional stereolithography printers from the likes of 3D Systems, EnvisionTEC, UnionTech and Carbon were seen, helping to grow the installed base. Overall shipments of stereolithography printers – laser based, LCD, DLS/CLIP and especially those leveraging DLP engines – outpaced the retirement rate of legacy printers in the field, leading to a larger operational base of Industrial/Professional printers which resulted in accelerated material usage.

Chart 3: Global Industrial/Professional printers installed by primary material/process

The thermoplastics market is even larger than the Industrial/Professional photopolymer market. This part of the 3D printing polymers space is dominated by material extrusion machines but recent growth in material utilisation is linked to powder bed fusion (PBF) technologies. The period Q4 2018 to Q3 2019 saw a huge increase of +41% in the number of polymer PBF printers installed, driven by growing sales of HP’s Multi Jet Fusion technology. HP offers both Industrial* price-class printers, for mass production, and Design* price-class printers, mainly for more typical 3D printing applications like prototyping and short-run production.

* 3D printer segment by price class: INDUSTRIAL ≥ $100K, DESIGN = $20K–$100K, PROFESSIONAL = $2.5K–$20K, PERSONAL ≤ $2.5K (excludes do-it-yourself DIY kit printers)

London, 16 January 2020 – Shipments of Industrial* 3D printers priced at $100K+ were up by +8% in Q3 2019 compared to the same period the previous year. This key sector – which accounted for almost 70% of all 3D printer revenues for the period – saw even more impressive shipment growth of +12% on a trailing twelve month (TTM) basis. The increase came as a surprise given the headwinds many vendors reported in the second half of the year: reduced demand from the struggling automotive sector, sluggish European economies and a generally weak global industrial manufacturing market all impacted the bottom line of many companies in the third quarter.

In the Industrial polymer 3D printer market, HP (now #2 in global shipments) saw excellent growth, shipping +347% more printers in Q3 2019 than in Q3 2018 as it continued to roll out its more affordable colour-capable units as well as began to ship the newest iteration of its most advanced, highest-end, production-focused models in volume. The Chinese domestic market also grew, mostly thanks to leading Chinese vendor UnionTech.

While Industrial metal printers made up just 32% of unit shipments in the class over this period, they accounted for just over 51% of revenues; metal 3D printing is one of the fastest growing additive manufacturing segments and has seen shipments grow at an average rate of +30% over the last two years. However, the dominant technology – powder bed fusion – began to struggle in the second half of 2019. In the third quarter, -19% fewer metal powder bed fusion 3D printers shipped than in the same quarter the previous year, with market leaders EOS and GE Additive both seeing weaker shipments not only for the quarter but for the trailing 12-months as well. Even so, aggregated shipments of metal 3D printers grew by +11% as a different technology began to take centre stage, driven by Desktop Metal and Markforged. The new crop of material extrusion metal 3D Printers – which saw year-on-year shipment increases of +43% – addresses new markets for prototyping and entry-level metal printing. Since many of these markets are outside the aerospace, automotive and medical sectors that currently use powder bed fusion machines, the growth in shipments of extrusion models was not related to the decline in those of the other type of machine.

Chart 1: Global Industrial price class 3D printer shipments and growth by material

There was good growth in North America and China during Q3 2019, where year-on-year increases in Industrial 3D printer shipments were +22% and +36% respectively, while the global #2 market, Western Europe, saw shipments fall by -28%. Sales in this sector of the market tend to be more provincial than in other industries: there is less East–West trade because of logistics (most Industrial printers are very large and very heavy) and because of less-than-favourable global trade conditions which make it difficult for emerging technologies like 3D printing to flourish. These trends held true in the third quarter when Chinese vendors flourished in domestic China while US and European vendors again saw most of their business come from the West.

Other printer classes

Of the three other major price classes for finished-good printers - Personal, Professional and Design – shipments of printers in the Professional class were most notable. Printer shipments in the third quarter in the Design segment was largely flat and shipments of Personal class printers continued to struggle, losing ground to kit-based solutions like those from China's Creality3D. The Professional segment continued to shine however, growing by an excellent +21% on the previous year and a solid +17% on a TTM basis. Many vendors who formerly focused on the yet-to-explode consumer market have shifted their product lines to move into this price class. Especially noteworthy in the Professional class in the quarter was the performance of Formlabs which finally began shipping new models in volume against strong pent-up demand and surged to the top of the market in this class as the availability of their new products was bolstered by glowing reviews.

Chart 2: Global 3D printer unit shipments and TTM growth by price class (note two scales)

Many forecasts for Q4 2019 and on into 2020 turned a bit cautious toward the year end due, in part, to weaker demand from key geographies, to softening orders from key vertical markets, and to uncertainties associated with global trade. The period was also marked by significant managerial changes atop leading companies, also contributing to near-term uncertainty.

* 3D printer segment by price class: INDUSTRIAL ≥ $100K, DESIGN = $20K–$100K, PROFESSIONAL = $2.5K–$20K, PERSONAL ≤ $2.5K (excludes do-it-yourself DIY kit printers)