What a difference a quarter makes. Even just a few months ago the channel was concerned over product shortages. Now things have changed quite considerably as we head through Q3. The current market is characterised by several trends. On the one hand, there's a glut of inventory in several segments, driven in part by unblocked supply chains and cooling consumer demand. The latter is due not only to the rising cost of living but also the fact that there's more for consumers to spend their money on in post-pandemic Europe.
That means the business market has become a bigger driver of growth of IT sales through distribution across Europe. Digital transformation projects are back on the agenda, and offices are being redesigned to support the new hybrid workplace. The market is also finally starting to see some EU Covid relief funds coming through. However, it's also important to remember that China's ‘zero COVID' policy will continue to hit logistics and component supplies.
Our forecast* for Q2 growth at +0.2% was close to the actual figure of +0.5% (including telecoms). We are hoping that our predictions for the coming quarter are similarly accurate. It stands at 2% for Q3, but we forecast higher growth by the end of the year as comparatives with 2021 figures become kinder.
*Request your copy of the Q3 Forecasting Report (available to CONTEXT clients and partners only).
PCs: We expect consumer and education sales to be significantly lower than last year, caused especially in the case of the former by rising inflation. Business demand will also sink, but not by as much, so expect a stronger second half of the year, despite an excess of entry-level stock which will need price reductions to shift.
Enterprise storage & servers: Newer chip sets will help to drive growth in the server space while products with higher capacity and faster drive access may buoy the storage market. Digital transformation projects are also good news, although component delays and price increases may continue.
Displays: Declining consumer demand for monitors has been offset by rising business demand, especially for more feature-rich products. The large-format display (LFD) market is buoyant as Europe continues to open up and stretch its legs following the pandemic.
Enterprise networking: Wireless demand continues to grow thanks to Wi-Fi 6 and the emergence of the new hybrid workplace, although growth in datacentre switching hasn't been as pronounced. Expect price increases on the back of some component delays.
Imaging: Consumers and businesses are choosing their products more carefully now, with overall demand declining and supply improving. However, some key components remain in short supply and high-end business multifunction printers are still being impacted by delays.
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