Research: A strong start to 2011 for the channel


Research: A strong start to 2011 for the channel

by Mehryar Hamid

The first quarter of 2011 has been one of global chaos and turmoil. From the devastating earthquake that hit Japan, to the debt crisis and economic woes of the Eurozone, to the revolutions in the Middle East and North Africa, the global markets grow more unpredictable each day.

Although the UK economy managed to grow by 0.5% in Q1 2011 following a poor Q4 last year, the spiralling oil prices coupled with rising inflation, government budget cuts, severe deficit problems in Spain, Portugal and Greece and the rising component prices due to disrupted supply from Japan in the aftermath of the earthquake, have led to some unexpected and turbulent times for the IT industry.

While the outlook may seem quite gloomy, in reality Q1 2011 has been a great quarter for the IT industry with growth seen across several product categories. The B2B Channels, which includes IT Mail Order and IT Resellers, played a crucial role in this as sales volume was up by 67.5% in comparison to the year before.

Even though the traditional B2B product groups, such as Desk Computers and Mobile Computers - which includes both Netbooks and Notebooks, were down 18% and 5.9% respectively, most of the growth actually came from the Web-books, Storage, Software and Headsets product categories.

Web-books are a great example of a growth driver for Q1 2011. The number of outlets stocking and selling these devices in March 2011 was up by more than 300% in comparison to July 2010, when the market initially took off. In this nine month period the number of brands operating in the market place has jumped from just six in Q3 last year to nineteen as of Q1 2011. As the number of retailers stocking and selling these devices goes up and as more and more brands have entered the marketplace, we have already seen the ASP drop over the last year, down to £398 in the B2B Channel in Q1 2011. As this side of the market develops in the coming months it will be interesting to see the impact it has on the traditional B2B mobile computing market, especially with the launch of Windows based devices.

Another IT category which has shown tremendous growth throughout the first quarter of 2011 is Storage. This side of the market grew by 23.5% in volume terms this quarter in comparison to the same time period last year. As capacities continue to increase to support a growing business need, both External and Network Attached Storage (NAS) will continue to play an important role in the overall growth of the IT industry. Similarly, the rise in internet telephony and its quick rate of adoption in the corporate world has significantly boosted the Headsets market which was up 80.5% in volume terms this quarter in comparison to Q1 last year.

However, with the fear of a double dip recession still looming, coupled with economic uncertainty on mainland Europe and political turmoil in the Arab world, it is hard to predict how the rest of 2011 will pan out. The one thing that is certain is that the IT industry is still in for some challenging times ahead.

Mehryar H GfK.jpg amid, GfK Account Executive, IT., 0870 603 8143,


This was first published in May 2011

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