Sales go mobile in the channel as businesses turn to tablets

It has been a positive first quarter for B2B sales despite the double dip, says Mehryar Hamid

Following a year of economic turmoil at home and abroad, many were hoping 2012 would be the year that the British economy would swing back to into growth. The increased VAT, austerity measures from the government, declining consumer confidence, closure of several major high street chains, and the riots were all events that helped spark some turbulent times for the UK economy last year.

In the run up to Christmas, various industry pundits stated that the worst was already over and the silver lining was just around the corner. However, the economic figures just published by the Office of National Statistics as we went to press represented a major setback to the plan, with the British economy as a whole failing to fire for yet another quarter.

GDP contracted by 0.2 per cent in Q1 2012, representing a dip back into recession. However, the services sector, including retail, was actually in the black and the B2B IT market definitely contributed to this.

Against Q1 last year, B2B channels were up 16.1 per cent in volume and 26.9 per cent by value. This strong year-on-year growth means that B2B channels now account for 42 per cent of total IT sales in the UK. Consumer channels, which still account for most IT sales, on the other hand, saw sales volume and value down 13.5 per cent and 3.7 per cent respectively, in comparison to Q1 2011.

While the consumer channels have been completely reliant on web books (known in commercial circles as tablets) for growth, B2B channels have seen growth coming from quite a mix of product groups, which is always a very positive sign for the industry.

The software, storage and PC markets continue to dominate the B2B side of the equation in Q1 2012, accounting for 82 per cent of the total spending in these channels.

Software has continued to play an instrumental role in the B2B market this quarter, with sales value up 20 per cent on the year before, primarily on the back of licence renewals. Another category that has had a major impact on this side of the market is storage. In the aftermath of the Thai floods last year, including their impact on production facilities across the region, storage device availability across the market was severely disrupted.

This limited supply coupled with consistently high demand across both the B2B and consumer channels resulted in skyrocketing average selling prices for these devices. Hence, this product group experienced artificial value expansion this quarter, pushing the total B2B spending on these devices from eight per cent in Q1 2011 to 14 per cent in Q1 2012.

On the PC side of the market, desktop computers have performed quite well this quarter. Both sales units and value were up, 32 per cent and 21 per cent respectively, in comparison to the same time last year. The end of Q1 also marks the end of the fiscal year, so a major contributor to this growth is probably the ending of annual public sector contracts.

Similarly, as netbooks fall out of favour in the B2B channels, web books will become ever more influential on this side of the market. Although some might question the viability of web books in a business environment given their compatibility issues and lack of encryption features, they account for three per cent of the total spend on IT products in the B2B channels at the moment, and this is only set to rise as we move further into 2012.

Mehryar Hamid is an account manager for IT research at GfK