Context: Channel growth slashed in half in Q1

UK distribution revenue falls due to slump in storage and Apple revenues

Growth across western Europe IT distribution halved annually in Q1, according to Context, which claims UK sales through disties fell by 1.6 per cent over the same period.

According to the analyst's SalesWatch tracker, across western Europe, growth in sales through distribution in Q1 was just 4.1 per cent, half what it was a year ago.

Sales in the UK fell 1.6 per cent over the same period, thanks to a fall in disk storage, telecoms kit and Apple revenues in the country. The UK was among the worst performers in Europe and only Germany, Switzerland and Finland suffered a worse quarter. Sweden and Denmark performed best, with sales through distribution in the countries up 26 per cent and 21 per cent respectively.

Overall, the slowdown in European growth was due to a number of factors, including the end of the "XP effect" – which saw customers flock to upgrade from the 12-year-old operating system – and sliding server sales at IBM.

"The XP-migration effect appears to have run out of steam, with desktop computing sales growth slumping by four per cent and that of software and licences slipping by seven per cent," Context said. "IBM had a bad quarter, seeing its growth slide to 14 per cent thanks to plummeting server sales – an area in which Lenovo has seen its channel revenue share increase from less than one per cent to three per cent in just a year."

Context co-founder Jeremy Davies remained optimistic about results for Q2.

"Our channel sales indicators are showing that growth should be steady in the second quarter," he said. "However, with so much of distribution business still reliant on PC revenues, softness in this sector prior to the launch of Windows 10 could depress sales and lower growth."