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, 30 March 2020 – Volume sales of PCs through Western Europe’s largest distributors increased by +38% year-on-year in the first three weeks of March as the accelerating spread of coronavirus produced a surge in sales of remote-working devices, according to the latest data published by CONTEXT, the IT market intelligence company.

As the crisis across Europe worsened, and countries took successively stricter measures to contain the spread of the virus, the resulting demand for home-office equipment led to a +51% year-on-year growth in sales of notebooks and a +9% rise in those of desktops.  The increase was greater for business-targeted products: commercial notebook sales were up by +56% compared to +44% for consumer-targeted products while, for desktops, there was year-on-year growth (of +16%) only in the business-targeted segment.

Looking at the top Western European markets, the growth in notebook sales was led by Italy, the European country first hit by the outbreak and the first to introduce strict measures to slow down the spread: Italian distributors saw notebook sales increase by +110% in the first three weeks of March. Spain was next with a growth rate of +87%, followed by Germany (+52%), the UK (+50%) and France (+5%).

The surge in demand for home-working devices over the past couple of weeks has led to a significant reduction in notebook stock in a number of Western European countries. With incoming supply also disrupted to varying degrees (depending on the OEM and product category) by manufacturing and logistics issues, providing PCs for the rising number of home workers could turn into a challenge over the next few weeks.

The present exceptionally strong growth rates are related to the sudden need to migrate employees to home-working and are expected to be temporary. Nevertheless, in many organisations, the current crisis is likely to have raised awareness of the economic necessity of providing sound digital solutions, and this is expected to result in increased investment in this area over the longer term.

                            Y/Y PC volume growth: Western European distribution

                        Commercial PC volume sales: Western European distribution

London, 06 May 2020 – Sales of monitors through Western Europe’s (WE) distributors grew by a record +35% year-on-year in March 2020 contributing to an overall +18% increase for the first quarter, according to the latest data published by CONTEXT, the IT market intelligence company.

Monitor sales, particularly to business customers, were expected to grow in the first half of 2020 – but not at the scale witnessed in Q1. In the second half of February, after many factories in China had been closed, distributors began to see increased orders as their customers prepared for future product shortages. And then the lockdown of most European countries in March led to many employees moving to working from their own homes. This transition resulted in a surge in demand for desktop monitors as well as PCs and computing accessories. School closures also helped drive growth of consumer sales as many parents found they had to share equipment with children suddenly being home-schooled. Moreover, despite the economic turmoil caused by the virus, there is still high demand for monitors from the public sector for, for example, hospitals and government departments. This increased need for display equipment led to sales of both business- and consumer-targeted models growing by +18% year-on-year in Q1.

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

The biggest change in demand was seen in week 12, particularly in the UK and Germany where March sales grew by +66% and +48% year-on-year, respectively. Meanwhile, distributors in France and Italy, whose sales had spiked in the second half of February, saw demand slow down over March resulting in respective year-on-year declines of -15% and -21% for the month. Sales in Spain, however, continued to boom with growth reaching almost +30% in both February and March. With consumer movement restricted, and stores closed by lockdowns, many industries, including IT, have seen a surge in online sales. Total monitor sales to e-tail increased more quickly than those to other channels, and growth for the quarter as a whole was +33%.

                 Desktop monitors: Weekly unit % share by channel, WE distribution

While many businesses and individuals have been putting off investing in their digital capabilities and hardware over the past few years, the current crisis has made them aware that better solutions are now urgently needed, leading to a rise in demand for more powerful devices that also enable remote working. Demand in Q1 however, was so unexpected and strong that it left many European distributors with very low stock levels. Combined with the supply disruption that has affected most vendors to a greater or lesser extent, this may lead to weaker sales over the coming weeks and, potentially, having an impact on May sales. However, if demand from both private and public sectors remains high and supplies reach normal levels, we should start to see a recovery by the end of Q2, continuing into Q3.

London, 5 March 2020 – The business market drove growth of revenues from desktop monitors in 2019 and has continued to do so in January 2020: revenues from business-targeted monitors grew by +7% year-on-year while those of consumer-targeted monitors were up by +1% according to the latest data published by CONTEXT, the IT market intelligence company.

For many vendors, 2019 was a very successful year in terms of desktop monitor sales. As 2020 begins, distributors are seeing consistent growth in demand for business-targeted monitors with sales up +4% year-on-year in January. And, even though this is less than the growth seen in the consumer market (+6%), it is coming from a very strong baseline: in January 2019 sales of business-oriented monitors grew by +12%. Along with greater demand, increased sales in higher price ranges (particularly in the €200–€300 category) have helped to drive revenues in the business segment to +7% year-on-year. Sales of consumer monitors were driven by those in lower price ranges (€100–€150), so revenues here were up by only +1%.

The increased sales of more expensive business monitors were spread across most distribution channels, and sales to corporate resellers grew by over 50%. This was driven by demand for 23.8", 27" and 29" models and those with USB-C ports – 60% of monitors in the €200–€300 price bracket sold to this channel offered this type of connection.

Desktop monitors: Business-targeted models in price range €200-€300, WE distribution.

Initially, after many quarters of growth in Western Europe, sales of desktop monitors were expected to slow down in 2020 with a modest growth in the first half of the year, continuing to benefit from PC refreshes as businesses that have delayed the implementation of Windows 10 make the transition. However, the recent coronavirus outbreak could change that scenario. While vendors may have already secured supplies of panels and other components for Q1, the impact of factory closures and production delays could be felt as early as Q2. The resultant product shortages in Q2 could lead to a pick-up in demand in the Q3 and price rises that have the potential to make H2 the stronger part of the year.

Despite production turbulence, vendors are aiming to keep revenues high by launching more innovative models and creating their own high-margin niches by focussing on, for example, models with high-resolution or refresh rates, improved ergonomics or touchscreens, or aiming models with advanced graphics capabilities at not just gamers but also users of other specialised applications.

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, 17 May 2019 - Printer markets have become increasingly healthy over the recent years and are currently robust, although, as always, they remain competitive. However, sales of printer hardware through distributors in West Europe (WE) were sharply down by -4.2% year-on-year in Q1 2019, according to the latest distribution data published by CONTEXT, the technology market intelligence company. This is not a surprise: the first quarter is, historically, the weakest of the year – and it is usually followed by a weak second quarter.

Sales of multifunction printers (MFPs) were down by -1.7% year-on-year: even though laser MFPs saw a sharp growth of +4.6%, this was offset by the negative performance (-3.4%) of inkjet MFPs which account for almost 78% of sales in WE.

Sales of single-function printers (SFPs) registered a strong decline (-13.6%) and contributed to the overall negative performance in Q1 2019. The ongoing shift from single- to multifunction devices is likely to be further consolidated with distributors reporting that reseller demand for SFPs, particularly lower-spec models, is low.

Laser MFPs saw growth of +4.6% in Q1 2019, driven by the exceptional performance of consumer-targeted devices (sales up by +80%), especially monochrome printers (sales up by +113.1%), which is primarily due to falling ASPs as distributors use promotions and discounts to clear stock and get ready for the arrival of new models.

Consumer printers as a whole steadily increased their market share and drove overall imaging growth in Q1 2019, as they had done in 2018. Sales of business-targeted models, which account for 83% of laser MFP sales and 92.8% of revenue, dropped by -13.4% (leading to a fall in revenue of - 5.5%), mainly because the ASP is continuing to increase. This suggests companies (small and medium businesses) are replacing entry-level business-targeted models with mid- and high-level consumer- targeted devices.

Inkjet MFPs reversed the positive trend seen in 2018 with volume sales declining by -3.4% in Q1 2019. However, revenues were up by +2.3%, helped by increased sales in mid- and high-price ranges and driven by sales of monochrome and A3 devices, which saw revenue growth of +60% and +20.7% on the previous year. It is interesting to note the exceptional growth of A3 printer sales in the consumer segment (+145.4%) – another factor suggesting that SMBs are buying consumer inkjet devices with greater functionality to fulfil their commercial needs.

          Imaging unit sales and Y/Y change by category – WE distribution

Imaging sales and revenues declined in almost all WE countries in Q1 2019. Italy was the only top 5 WE country which continued to register a positive year-on-year performance in terms of both units and revenues. The increase there was driven by strong consumer sales from HP (sales up by +62%), Brother (+38%), Samsung (+15.6%) and Ricoh (+15.5%), which share 69.9% of the country’s printer market.

Spain also saw growth of both units and revenues in Q1 2019, reversing the negative trend of 2018.This positive performance was driven by mid-range and high-range consumer devices, and by brands such as Kyocera (sales up by +149.3%) and Epson (+11%), even though these have a combined market share of only just over 22%.

In the United Kingdom, where consumer confidence is low amidst Brexit-related uncertainty, last year’s positive trend was reversed and sales (units and revenues) declined in Q1 2019. There were falls in both consumer and business segments, and significant drops for brands such as Ricoh (year-on-year sales down by -90.5%), OKI (-36.8%), Epson (-34.3%), Lexmark (-9.9%), Canon (-9.1%), Xerox (-4.9%) and Brother (-3.5%), although other companies, which share 59.4% of the country’s printer market, saw smaller declines.

Germany and France continued to register negative year-on-year changes in volume sales and revenues, with strong falls in both consumer and business segments. This had an effect on all the brands which share over 94% of the printer market in these countries: Ricoh saw volume sales decrease (by -39.8%), as did Samsung (-33%), OKI (-31.4%), Kyocera (-16.7%), Epson (-15.4%), HP (-12.7%), Lexmark (-8%), Brother (-5.8%) and Canon (-3.7%).

     Graph - Y/Y change in imaging units sold through distributors – Top 5 WE countries

Table - Y/Y change in imaging units sold and revenue – WE distribution, Q1 2019

Looking ahead, the market is likely to see other changes alongside the ongoing shift from single-function to multifunction printers.

Managed print services (MPSs) that allow customers to transform their workplaces from paper to digital will continue to expand in 2019 as distributors and retailers use their partnerships with vendors to provide comprehensive, cloud-based MPS solutions to consolidate workplace printing. The emergence of enterprise Internet of Things (IoT) platforms offering asset management, fault detection, smart analytics and remote monitoring presents a broader opportunity for MPS providers to participate.

Over the next one or two years, we expect to see relatively fast growth in sales of production-standard inkjets, wide-format printers (both digital and inkjet), and digital toner-based devices. However, the five-specific print-market segments that are likely grow at a relatively higher rate are packaging and specialty packaging, labels and wrappers, signage, direct mail and point-of-purchase.

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, 11 February 2020 – The adoption of SSDs for primary storage accelerated during the fourth quarter of 2019 as the volume of HDD PCs – notebooks, desktops and workstations – sold through the Western Europe (WE) IT distribution channel fell to 9.4%, according to the latest data published by CONTEXT, the IT market intelligence company.

                       WE PC market share by primary storage type: all PCs

As expected, 93.3% of new laptop PCs sold in Q4 2019 had SSDs as their primary storage component, up from 66.7% at the end of 2017.

                         WE PC market share by primary storage type: laptop PCs

More surprisingly, SSDs are also increasingly being used in desktops with the proportion of new devices using them reaching 82% at the end of 2019, up from 48.5% in 2017.

                     WE PC market share by primary storage type: desktop PCs

The adoption of SSDs is fastest in Nordics and The Netherlands which had an almost HDD-less PC market by the end of 2019 with the components used in only around 2% of PCs, inclusive of laptop and desktop. Germany follows – there, SSD share of the overall PC market is 93.4% – and the UK completes the podium with only 9.9% of PCs sold in the country in Q4 2019 containing HDDs. The transition is slower in Southern Europe where an average of 85% of PCs sold at the end of 2019 came with SSDs.

The sharp fall in price per gigabyte observed in 2019 is the main driver of accelerating SSD adoption as it enables vendors to sell SSD configurations at competitive prices. Meanwhile, online storage services are getting cheaper, and the use of streaming online services more common, so there is less need for high-capacity local storage. Vendors can therefore sell models with less storage and this, too, is supporting the transition towards SSDs. And, last but not least, the majority of consumers have now experienced the advantages that SSDs bring to day-to-day computer use so are happy to pay a little more for a machine with this type of storage.

Given these trends, it is pretty safe to say that, by the end of 2020, no new laptop sold in WE will have HDD as the primary storage component – and there’s not much doubt the desktop segment will follow closely in 2021.

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)