A tale of two channels for IT

Current trends are changing both consumer and business tech-buying behaviours, notes Dominic Ashford

The value of the IT market as tracked by GfK saw 0.4 per cent value growth in Q2 2014 compared with Q2 2013. Declines for notebooks and media tablets were offset by growth in other areas such as desk computers and networking, which resulted in this flat level of growth.

Investigating these trends leads to some interesting conclusions.

The notebook market, for example, can be considered a tale of two channels. Although the value of the B2C notebook market declined 12 per cent year on year in Q2, B2B sales of this form factor grew seven per cent over the same period. This B2B notebook growth is not a new trend; in fact, you have to go back to Q4 2012 to find the last time B2B sales of notebooks declined year on year.

This shows that notebooks remain the dominant PC form factor choice for businesses and the continual growth is a reflection of the growing confidence that companies have in the economic recovery.

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Perhaps more surprisingly, sales of desktop computers have also been growing. In Q2, this segment expanded nine per cent in value terms from the same quarter of 2013. Unlike the growth in notebooks, the desktop growth was driven by B2C sales, however.

Desktop sales in revenue terms in GfK's tracked retail channels grew 38 per cent Q2 on Q2, offsetting a value decline of two per cent in the B2B channels. There are several potential factors contributing to this growth.

With the explosion of tablet sales over the past three years, consumers could be opting for a central desktop "hub", while tablets and smartphones provide mobility.
Another factor is the growing popularity of PC gaming, a consumer need better served by a desktop than a notebook or tablet.

There are growth areas beyond PCs. Certain product groups are being directly influenced by the aforementioned expansion. Computer keyboards (excluding gaming products) grew by 18 per cent in value terms year on year in Q2, while monitors increased by 20 per cent.

Computing trends have also affected growth more broadly. Networking product sales expanded 16 per cent by value, comparing Q2 2014 with Q2 2013. This trend continues to be driven by the ever-rising amount of data and number of wireless or connected devices that consumers and businesses use.

Interestingly, the areas of networking performing best are not segments such as routers and networking cards that historically have been mainstays. Instead it is products such as powerline, with a Q2 year-on-year value growth of 32 per cent, and WiFi repeaters, which enjoyed a Q2 year-on-year value growth of 63 per cent.

These offer a cost-effective way to improve or extend connectivity in a home or small office. Manufacturers and retailers have seen success with these products in such a complex market at a sub-£40 price point with strong point-of-sale marketing.

In summary, both B2C and B2B IT trends are being affected by the move to a more digital "life". In the business world, the notebook still offers the best compromise between flexibility and utility, and in the consumer sphere, where the desktop is making a comeback as a central store or hub, individuals are happy to use their tablet or smartphone for media consumption or web browsing.

These trends affect the peripherals markets where sales of networking products that meet consumer and business data needs at a cost-effective price point are growing at a genuinely impressive rate.

Dominic Ashford is an IT account manager at GfK