Press_Release_content_26 - 05 - 2020
In Enterprise, hardware has been the biggest casualty of COVID while services show resilience
London, 26th May 2020 - Hardware has been more negatively impacted by the COVID-19 pandemic than software or services, although some sectors like computing components continue to do well, according to the latest channel analysis from CONTEXT, the IT market intelligence company.
The latest data from the analyst reveals Enterprise hardware revenues declining from -1% year-on-year in January to -11% in March and -17% in April, while services have increased to 4% in April and software revenues slipped from 10% to 4% over the period.
Of the major categories, those experiencing some of the biggest declines in revenue from Jan-April were servers (-10%), continuing a historic decline, large format displays (-8%) strongly impacted by the suspension of projects during the crisis and disk arrays (-7%).
“Whilst the Covid crisis has evidently impacted sales volumes in March and April, long-term drivers are of greater significance to datacentre infrastructure, with the move from on-premise to cloud affecting negatively the sales of mainstream servers and storage systems through Distribution,” says Gurvan Meyer, Senior Research Analyst and Head of Enterprise Team at CONTEXT.
The resilience of services is due to the essential priority of keeping IT infrastructure going and has been strongly aided by technology. If this crisis had happened ten years ago, the industry would have had great difficulty to assure this continuous support. Resellers have been able to maintain consultancy/professional services and the same is true for run services from distributors with advances in tech that allow working from home using corporate tooling/tunnelling while ensuring that security considerations continue to be adhered to.
Overall, the European IT channel bounced back into positive revenue growth in the four weeks to week 19 (ending 10 May) with figures of 3.4% YoY, versus -1.2% the previous week. The US has continued to decline in week 19, showing a decline of -7%, compared to -3.7% in the previous week.
Nevertheless, CONTEXT is forecasting a decline in revenue growth in Europe of -4.1% for Q2. Poland displays positive YoY growth for the period (7.3%) while Italy (-9%), France (-8.9%) and Spain (-7.8%) are the biggest losers, although their respective GDP declines are forecast to be much greater.
The positive signs are that in Italy, Belgium and Spain revenue is starting to climb, whilst in the UK, a shortage of big deals is having a negative impact. However, the overall -4.1% channel growth figure for Q2 should be put in perspective with the much larger predicted Euro area GDP decline of -12.5% in the period. Traditionally we talk about the performance of the IT industry as 1-2% better than GDP but it is performing much better than that.
CONTEXT’s market intelligence, performance benchmarks and opportunity analysis empower clients to optimise operations and accelerate tomorrow’s revenues. With over 35 years of industry partnership and experience reporting on large datasets, CONTEXT delivers analytics at all points in the value chain, providing clients with actionable insights rooted in concrete data and a profound understanding of customer needs. CONTEXT is headquartered in London, with over 300 staff across the world and in 2019 was recognised as one of the UK’s Best Workplaces™ by Great Place to Work®.
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