Ian Nethercot, MCIPS, Supply Chain Director at Probrand, shares his learnings on the latest IT supply chain developments.
COVID-19 continues to depress some parts of the economy, but from a financial perspective, there were some silver linings. Sales in technology that support work and play at home were on the rise in September, giving the IT supply chain and business users some much needed respite in what has been a difficult year for supply of these products.
As per usual, it was not all rosy, and fortunes continue to drop in the smartphone market. No one can deny the general downturn in sales in this category.
To help navigate the ups and downs and maintain a clear view of what represents a fair price, here are some of the latest developments and major movements that are influencing key IT product categories.
The euro slipped consistently against the dollar during the first three weeks of September. From a high of 1.1955, it fell quickly to 1.1830 on September 3. It ranged between 1.1788 and 1.1868 for the next two weeks until September 21, when it began a one-week drop to hit 1.1628 five days later. It then rallied slightly to finish the month at 1.1724.
The euro’s fortunes against the pound were almost the exact opposite. It began the month at 0.8914 before dropping to a low of 0.8888 the following day. It spent the rest of the week on a plateau before rising sharply from 0.8915 on September 7 to 0.9246 on September 11. It rose to a high of 0.9255 the next day before falling to 0.9120 on September 17, and again through 0.9183 on September 22, falling to 0.9083 on September 29. It ended the month with a slight uptick at 0.9108.
Europe saw a marked rise in COVID-19 cases during September, reaching record highs at the euro’s zenith against the dollar. The realization of the situation’s severity in Europe, along with ongoing concerns over the euro’s high valuation, broke the spell. Comments from Chicago Fed President Charles Evans signaling an interest rate hike might have helped depress the euro, even though he walked them back a day later.
There was one clear thing behind the euro’s good fortunes against the pound: Brexit. Trade talks between the UK government and the EU broke down acrimoniously, dampening the effect of a healthy 6.6% growth in the UK economy during July. Businesses hate uncertainty, and the frozen relationship between the UK and Europe has left businesses feeling grim.
Phone and Tablets
Counterpoint Research found that a quarter of people in the UK would spend at least $600 on their next smartphone. It also noted a 10% increase in average selling price in Q2 2020 even as shipments fell 23% and revenues fell 14% YoY. The premium market is resilient, the company said, declining at just 8% YoY during the quarter. The uptick in 5G handset sales has helped buoy this market segment. However, this rise in whole ASP wasn’t equally distributed; European ASP rose just 1% to $291 in Europe, putting it behind the rest of the world, other than Latin America, which saw a 5% drop.
Those figures focus on Q2, but the overall ASP increase might not last out the year. Economic uncertainty is driving down smartphone prices, warned IDC. This year, 73% of shipments will be priced below $400, the company said.
Global shipments of gaming PCs and monitors are expected to rise 16.2% YoY to 49.6m units in 2020, according to IDC. New GPUs from Nvidia, AMD and Intel will help a market already fueled by COVID-19 as home-bound consumers look for entertainment. EMEA enjoyed a 33% YoY spike in gaming desktop and notebook sales in Q2, with a 29.6% growth in Western Europe, primarily in notebooks, which grew 40.7%.
Premium Ultramobiles & Wearables
Smart home device sales will grow 4.1% YoY to over 854m units, according to IDC. Home monitoring and security was the biggest single performer, growing 16.2%, which feels a little strange, given that everyone is working from home. The rise in wearables makes more sense; IDC predicted a 14.5% YoY growth in these systems to 396m units from 345.9m last year. Watches (14.3% and hearables 14.1%) led the charge, with wrist bands growing 2.4%.
VR headset sales will suffer a short-term 6.7% YoY decline in 2020 thanks to supply chain disruptions, said IDC. The analyst predicted it will revert to a 46.2% double-digit growth next year. After all, who doesn’t want an alternative reality in 2020? The industry’s good fortune will continue through 2024 with a healthy 48% CAGR.
Price increases hit a high of 51,065 on September 14, across a variety of product categories. Meanwhile, price decreases hit a high of 37,810 on September 3.
Stock increases and decreases were characteristically subdued in number compared to fluctuations in pricing. Increases saw modest peaks on September 3 (6,397) and September 18 (5,973). Stock decreases spiked on September 15 at 15,739 and September 29, when they reached 15,549.
Disclaimer: The opinions expressed are those of the author and do not necessarily reflect the official position of Spend Matters.