Second quarter an uncertain one for IT

GfK market watcher Dominic Ashford notes varying sales strength across categories

The second quarter of 2011 showed that this year continues to be an uncertain one for IT. Our figures for the total audited sales across Britain show that the volume of IT sales in total declined 0.2 per cent between Q2 2011 and the same period last year, but grew 6.5 per cent between June 2010 and June 2011.

As we have seen in recent quarters, several key product groups within IT continued to show strong growth, while traditional stalwarts of the category experienced a decline.

Unsurprisingly, the web books category continued to be a strong driver of IT sales, with 2,421 per cent growth by volume between Q2 2010 and Q2 2011. To give a clearer picture of this increase, after a slight dip in sales in the first three months of the year, sales in Q2 2011 were up 11 per cent on the first quarter of the year.

Rapid web book expansion

In the second quarter of 2010, the web books category accounted for 0.3 per cent of the value of the IT product category, whereas in Q2 it had grown to 5.4 per cent. Furthermore, the number of different brands of web book available rose 650 per cent between June 2010 and June 2011 - underscoring the rapid expansion of sales in this product group.

The growth of these devices has had implications for other product groups in the IT category. Keyboards specifically designed to be used for web books accounted for 3.2 per cent of the total value of keying devices sold in Q2 2011, compared with the same period in 2010 when they did not account for any sales through our Panelmarket series.

These devices also had an average selling price of £50 per unit in Q2 2011, compared with £17 for other computer keyboards in the same period. This explains why web book keyboards had such a high value share in the keying device category, despite having only a 1.1 per cent share of the volume sales of the product group.

This contributed to the overall keying devices product category increasing in value terms by eight per cent between Q2 2010 and the same period in 2011. Conversely, pointing devices experienced a 10 per cent value decline in the same period, as many new touchscreen devices do not require mice, but might still warrant the occasional use of a keyboard.

The bank holiday period in Q2 did not provide the boost in IT sales for which some had hoped. This perhaps was a reflection on the weather or low consumer confidence. The tracked volume sold in the IT category did not change between March 2011 and the same month in 2010. Meanwhile, sales volume in April 2011 was 4.6 per cent lower than in April 2010.

Significant declines were experienced by traditional computing formats. Notebooks saw an 8.7 per cent fall in sales in value terms between Q2 2010 and Q2 2011, and desktops experienced a decrease of 11 per cent by value over the same period. If the more recently introduced all-in-one desktops (computers which combine the monitor with the tower) are excluded, the decline for desktop computing between Q2 2010 and 2011 was 18 per cent.

Traditional PC form factors declined and web books experienced growth - that is a trend difficult to ignore. However, it seems unlikely that consumers are replacing desktops or laptops with web books, because the latter occupy a different niche.

More feasibly, it appears that people are trying to extend the life of their traditional computing devices, with disposable income being spent on the newer web books. Even when looking at the netbook market - a computing product group that saw sales in value terms plummet 36 per cent in Q2 2011 compared with Q2 2010 - it is hard to say definitively whether web books have cannibalised netbook sales.

It seems therefore that the period into which we are heading will be an interesting one for the IT channel. We will see whether sales of PCs grow with the improving economy, or consumers opt to purchase web books, which are used in different ways.

Dominic Ashford is an account executive at GfK UK