Research Updates

London, 20 Oct 2020 - Volume sales of notebooks through Western Europe’s largest distributors increased by +40% year-on-year in Q3 2020 as demand for remote-working solutions, e-learning devices and home-entertainment systems remained high in light of the current pandemic, according to the latest data published by CONTEXT, the IT market intelligence company.

Notebook sales to commercial channels, including corporate resellers, small and medium resellers and business e-tailers, were up by +35% as business organisations and the public sector continued to invest in devices for working remotely, and demand from the education sector remained high.

Mobile sales to consumer channels – including retailers and consumer e-tailers – grew by an even stronger +47%; clearly, with Covid infection rates rising again and many countries facing the threat of new lockdowns, home users have increased their spending on new IT to make sure there are enough devices per family for e-learning and gaming.

All of the top Western European countries posted healthy notebook sales in Q3 2020, although the individual growth rates varied. Italy led the country ranking in terms of year-on-year growth with an increase of +85%, followed by Spain (+52%), the UK (+46%), Germany (+41%) and France (+41%).

The high level of demand for mobile devices has led to a significant reduction in notebook stock across most Western European countries - particularly in the entry-level segment, which caters for the budget-conscious education, public administration and home-learning sectors. While demand for notebooks is expected to stay healthy for the remainder of 2020 and growth rates should be strong, the year-on-year performances in individual segments could be impacted by low product availability.

The desktop segment again presents a distinct picture in Q3 2020. Volume sales of desktops were down by -22% year-on-year during the quarter, although this represented a softer decline than the -28% drop registered in Q2.

PC volume sales: Western European distribution

Y/Y notebook volume growth:Top 5 Western European countries

London, 03 Aug 2020 – The strong pandemic-related notebook momentum seen at the end of Q1 2020 carried on into Q2, according to the latest data published by CONTEXT, the IT market intelligence company.

Notebooks continued to see extraordinary growth across Western Europe’s largest distributors, with volumes up +55% in Q2 2020 compared to the same period last year. The Q2 rise was driven by Q1 order fulfilment as product supply improved, but also by newly received orders as demand for remote-working and -learning devices remained high in a quarter which began in a time of strict lockdowns and ended with the easing of the most restrictive measures. Notebook sales were strong across both the commercial and consumer segments, although commercial sales showed the stronger performance: business-targeted notebooks were up by +70.4% year-on-year while consumer systems grew by +38%.

The picture was entirely different for desktops: volumes in the category dropped by -27.8% year-on-year in Q2 2020, with commercial systems down -31.6% and consumer products -17.5%. OEMs across all Western European countries saw demand for the category dive, and distributors have been voicing strong concerns about the resulting rise in stock levels. Clearly, the pandemic has acted as an accelerator of the move towards mobile systems at the expense of stationary products. It should be noted, however, that commercial desktops faced a difficult year-on-year comparison in Q2 2020, with +17% growth one year ago as organisations prepared to migrate to Windows 10.

Looking at channel sales, consumer channels saw a dip in share of sales to retail stores following pandemic-related shop closures in March, to the benefit of sales to consumer etailers. Volumes of business-targeted notebooks to SMB resellers dropped sequentially in April while sales to consumer etail saw a rise, suggesting that some smaller companies moved to buy online when a number of small and medium resellers became inactive during the peak of the crisis.

The numbers are consistent with the challenges posed by the pandemic - including changes in demand and purchasing behaviour, the closing of shops, companies becoming temporarily inactive, and offices across the continent going remote. Notebooks have proved to be the form factor of choice; other IT equipment geared to facilitate remote working and homeschooling has also done well during the crisis, including monitors, accessories and communications software.

Moving into Q3 2020, portable demand is expected to stay healthy in a number of segments.There is however, a high level of uncertainty regarding the impact of the crisis on Western European economies, meaning that a lot of organisations will be very cautious when it comes to IT spending over the next few months.

Y/Y PC volume growth: Western European distribution



Q2 2020 Y/Y PC volume growth: Western European distribution

London, 10 July 2020 – Sales of monitors through distributors in Western Europe (WE) grew +14% year-on-year in the part of the second quarter of 2020 up to the first three weeks of June, according to the latest data published by CONTEXT, the IT market intelligence company.

Strong consumer demand drove the increase as, under lockdown, individuals have been buying monitors for home offices, study environments, and gaming and leisure setups. Sales of consumer monitors have therefore soared: they were up +29% year-on-year in April, +39% in May and +43% in June. Sales of business monitors were below the 2019 level at the start of the quarter. However, this improved in the first three weeks of June (W23–25) when sales – primarily to small, medium and corporate resellers – were up +14% on last year.

Even while business-targeted monitors were struggling, distributors continued to work with their business-focused partners, sometimes selling them models usually aimed at consumers. Although this suggests that a monitor’s specifications and price bracket matter more to customers than whether it has been designated a business or consumer device, some of the shift was probably the result of limited supply.

Desktop monitors: Weekly unit sales by target customer, WE distribution





 

Strong demand in the second quarter coincided with low supply for many vendors as a result of the factory closures earlier in the year. In countries where demand was continuously very high, such as the UK, stock levels were down to only one or two weeks’ worth. This did not, however, have an adverse effect on the quarter’s results.

The same strong demand was seen across several of the major WE countries – Germany, Spain, and the UK – despite earlier concerns that the pandemic would soften spending. While unit sales for April and May were down year-on-year in France and Italy, there was a turnaround in June when both these countries showed strong year-on-year gains. Sales of cheaper monitors, particularly those retailing at less than 100 euro, helped the recovery. Indeed, there were growing sales of these lower-end models across WE, particularly to corporate resellers (+33% year-on-year). Sales to retail chains and business etailers also improved.

Desktop monitors: Weekly unit share by price band, WE distribution



Supply is expected to reach normal levels during Q3, and vendors should be able to respond to any extra demand from businesses that feel they can renew equipment for staff returning to offices as lockdowns ease. The coming quarter is traditionally weak because of holidays and, even though there will be less travelling this year, it would be unwise to be optimistic about the coming months. Vendors and distributors are also concerned about the extent to which demand may have peaked in the first and second quarters of 2020, affecting the second half of the year. There is much still to learn about the pandemic and what it means for people and their material needs.

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, 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, 10 Aug 2020 – Sales of home networking products have been positively impacted by the COVID crisis in Europe with households updating their wireless equipment to enable working from home and improve web access for the whole family, according to the latest data published by CONTEXT, the IT market intelligence company.



Growth in Q2 was driven by sales of extenders and mesh systems whilst there was a more moderate increase in router sales. This confirms that consumers have been looking for solutions to improve WiFi coverage in their home by eliminating dead spots rather than by updating core networking devices (such as routers).

Monthly Y/Y Revenue Growth



However, year-on-year sales of routers picked up in June, after only slow growth in April and May, and contributed to making June the strongest month of the quarter for this category. It shows that consumers who had prioritised increasing household WiFi coverage at the start of the crisis are looking at updating the main component of their network as the possibility of a longer time at home becomes more real. And, in doing so, they are prepared to make an investment in more expensive products: the average selling price for routers sold in June was higher than April and May.

Routers: Average Selling Price (Euro)



Looking at the product mix sold over Q2 2020 provides a partial explanation for this change. Spending at the beginning of the quarter was, for many households, an unplanned emergency response. In Italy – where home networking revenues grew by +60% year-on-year in Q2, the second top highest of any of the Top 5 European countries – mobile broadband router revenues grew by more than 200% in April when large numbers of cheap pocket routers were sold. This makes perfect sense: Italy has the cheapest mobile broadband contracts in Europe and consumers jumped on inexpensive mobile router options while taking advantage of these contracts at the start of the crisis. Another example of this trend is the relatively high volume sales of older WiFi-N extender products seen in April.

Italy Focus: Monthly Y/Y revenue growth



 

The improved performance of more traditional and more expensive routers in June, including DSL and cable modem routers, is good news for vendors who may have missed out on the first wave of home-network spending. Increasing sales of WiFi-6 standard devices, which now account for 5% of consumer router and extender revenues, is another positive signal of more value being added.

We have also heard that households are updating their broadband package, or even changing internet providers, in order to solve issues they faced during lockdown. With uncertainty about a second wave of COVID cases, and the possibilities of further lockdowns in Europe, the outlook for home networking is bright. Consumers are already looking at longer-term investment to handle the new normal, and the positive effect on revenues from home-networking devices should continue in the months to come.

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.

April 2020 - A weak Q4 2019, now compounded by potential supply-and-demand constraints associated with the coronavirus pandemic, leave the global 3D printer market set to see fewer printers ship in 2020 than in 2019.

As of the end of Q1 2020, many 3D printer companies from the US, Europe, China and everywhere across the globe have rightly refocused their effort away from printer sales to producing much-needed supplies to help combat coronavirus, according to the latest data by CONTEXT, the market intelligence company.

Focusing efforts on producing much-needed medical supplies has meant a move away from the production and sale of printers towards service businesses and service-bureau infrastructure. Coming on the back of weak shipments in Q4 2019, this refocus – and the supply-and-demand constraints expected in the weeks to come – looks to make 2020 a difficult year for 3D printer shipments.

While COVID-19 had not yet had an impact, global 3D printer shipments were already unseasonably weak in Q4 2019. For many manufacturers – particularly those focused on Industrial* or Design* price-class printers – this slowdown was associated with a weak automotive market, a generally weak manufacturing sector and sluggish Asian and European economies.

CONTEXT notes that printer shipments over the quarter saw year-on-year changes of -11% (Personal* price-class printers), +26% (Professional* printers), -22% (Design) and -23% (Industrial); the only increase being in the hot Professional category.

Over the year as a whole, there was only +1% growth in shipments of Industrial printers compared to 2018; in the Design segment, -6% fewer printers shipped; and finished-good Personal printer shipments were down by -11% as demand continued to shift to kits, sales of which are hard to quantify. Once again, the only year-on-year growth was in the Professional segment where shipments rose by +16% as many longstanding 3D printer companies returned to the space and others, previously focused on producing Personal printers, moved up into it.

Chart 1: Yearly global finished-good 3D printer unit shipments and growth by price class (note two scales)

In the finished-good Personal 3D printer market, 2019 was strong for established vendors such as XYZPrinting, Prusa Research, Monoprice, Anycubic and Flashforge but it was the more ill-defined kits market which drew the most industry attention. The leader in the kits space - and far-and-away the market share leader in the global 3D printer market when considering both kits and finished-goods - was China’s Creality 3D. While it was once assumed that consumer demand for DIY kits would fade away in the face of the better out-of-the-box experience offered by completed machines, self-assembly – largely catering to hobbyists – has come back into vogue in recent years. This is thanks to not just very low price points but also protectionist measures which favour the importation of parts that can be assembled locally over finished goods even though, in this case, the assembly is on an individual do-it-yourself basis rather than factory-level production. The number of DIY kits shipped in 2019 was almost twice as high as that of finished printers but, if aggregated into the annual total, sales to this nebulous market would have increased global revenues by only +9%.

In the Design and Industrial segments – which collectively accounted for over 78% of all 3D printer sales revenue – aggregate shipments were down -3% for 2019. Although metal 3D printer shipments were up +4% on the previous year, with steady growth seen in emerging technologies like material extrusion and directed energy deposition, there was a -10% decline in those of mainstream powder bed fusion printers. Market leaders GE Additive and EOS were joined in the top 5 by Desktop Metal and Markforged (both of which offer material extrusion based solutions) and newcomer HBD which performed strongly in China, its domestic market. Overall shipments of Industrial and Design polymer printers fell by -5% compared to 2018 but certain vendors, including HP and UnionTech, saw excellent growth. Stratasys remained the market leader in terms of unit volumes even though annual shipments dropped by -12% in 2019.

Chart 2: 2019 Global 3D printer unit market share leaders: Industrial and Design price classes

Forecasts for 2020, based on information available as of 23 March, show printer manufacturers are now assessing, on a daily basis, the impacts of a disrupted supply chain and uneven human productivity on both their own ability to produce hardware and the end-markets to which they cater. In recent years, vendors have typically begun with a bullish outlook and slowly adjusted their shipment outlook over the year. Currently, however, vendors are offering only informal/high-level forecasts: most are beginning 2020 with a negative outlook and anticipating they will recover as business begins again once the global pandemic subsides. While each printer class caters to different users, many of the key end-markets (such as the dental, aerospace, automotive, consumer product, orthopedics and education markets) are negatively affected by global work closures and slow-downs. On the supply side, key components for printers, as for many other electronic goods, come from China, the region impacted first by the pandemic. As a result of the uncertainty, hardware vendors are now thinking in terms of weeks and quarters rather years, and current aggregate forecasts show the Industrial and Design segments are set to see shipment declines of -4% from 2019 to 2020 even taking into consideration a recovery in the 2nd half of the year.

In the Industrial market – which accounted for 68% of global 3D printer hardware revenues 2019 – shipments in the second half of 2019 were slow, even though this is usually the strongest part of the year, and the outlook for 2020 was, therefore, already challenging. Taking into account both these negative headwinds and the supply-and-demand challenges associated with global reactions to the coronavirus, this segment hopes to see a slide of only -2% in printer shipments in 2020 after its 5-year CAGR of +14% and anticipates a rolling recovery by region, starting with the East.

As the pandemic comes under control and economies return to normal, there is great potential for the 3D printer market since the ability of the technology to assist with the immediate needs of the medical community have showcased its quick-turn capabilities worldwide. Responses to the pandemic are also demonstrating that leveraging 3D printing for local production, instead of relying on complex multinational supply chains, has the potential to help many companies mitigate future risk.

                  Chart 3: Global Industrial 3D printer shipments and forecast

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)