Category Archives: IT Pricing

New partnership launched to improve IT analytics

Imperial begins Knowledge Transfer Partnership (KTP) with CONTEXT and Innovate UK to develop predictive analytics capabilities for the IT industry.

Imperial’s Mathematics Department is proud to announce their latest partnership with CONTEXT, a leading global IT market research and business intelligence provider, which will produce an industry leading predictive analytics platform.

The project is co-funded by Innovate UK and CONTEXT, through a KTP framework that is proven to produce benefits for the UK economy and to both partners.

The IT market research industry has limited capacity to produce accurate sales demand forecasts and future market performance indicators due to the volatility and complexity of the industry, as well as a lack of data.

As a result, currently available performance forecasts are heavily influenced by individual analysts’ inputs and educated estimations, leading to high levels of inaccuracy when comparing initial forecasts to actual sales performances historically.

The new partnership will work to create a more formal forecasting methodology.

Bringing CONTEXT to Imperial

CONTEXT, which manages the largest database of IT hardware transactional sales and pricing information in the world, hosts one of the few viable datasets that can provide the building blocks for a formal forecasting methodology. They are now investing heavily in new analytics and BI capabilities, which brought them to Imperial with this specific challenge to solve.

Beginning on 1 December 2018, the two-year project to build a flexible forecasting platform will be led by Dr Yang Zhang, an experienced associate researcher who has held hybrid industry-academic posts at Nottingham University. Dr Zhang’s experience and drive to apply novel research to real-world applications is set to drive the project to become an academic and commercial success.

Throughout the project she will also host regular ‘Forecasting Research Group’ meetings, which will bring together some of the brightest analysts in the industry who tackle the issue of accurate forecasting availability on a monthly basis. Together, they will steer the development of the platform, to ensure commercial feasibility and application.

Benefitting research and the economy

The academic supervision and leadership for the project will be provided by Professor Niall Adams and Dr Din-Houn Lau of Imperial’s Mathematics Department.

Dr Lau was previously funded as a postdoctoral researcher by Innovate UK, so is perfectly placed to undertake the role of Knowledge Base Supervisor for the project. He is now a Group Leader in the Data-Centric Engineering programme led by the Alan Turing Institute. Professor Adams is Head of the Statistics section at Imperial and has extensive industrial collaborations across a variety of sectors/sizes, including cyber-security, banking, startups and UK government.

The Mathematics Department expects that this project will result in a valuable impact case study for a future Research Excellence Framework exercise. Further collaborative work with CONTEXT and the Forecasting Research Group may also develop, along with new Knowledge Transfer Partnerships.

This is a fantastic opportunity to advance this field of research further, whilst simultaneously benefitting the UK economy.

Guest blog by Mr Thom Brain, Department of Mathematics, Imperial College

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Trump’s tariff war – the challenge for IT procurement departments

As the tech world prepares to take on the threat of an increase in US tariffs from 1st January 2019, we look at how the procurement function deals with macro-economic events which impact the cost of IT products. 7 years ago it was the Thai floods which caused a worldwide shortage of hard drives. The Thai market was the second largest producer of hard drives after China, and the floods impacted the supply of 30% of global production. The result was a large hike in prices, and delays in the production of PC’s. It was not all necessarily bad news for the manufacturers who were able to reset expectations and raise prices in a competitive market. But how do procurement departments navigate in a time of increasing IT product costs and how they can assess how real and long-lasting these changes are?

There is no shortage of such issues. Currently there is a shortage of Intel processors due to unexpected growth in the PC industry, according to Intel CEO, Bob Swann. For the earlier part of this year, (as can be seen on the graph showing ASP’s) the cost of RAM has increased significantly due to shortage of supply only stabilising in recent months.

RAM

Source: CONTEXT SalesWatch Distribution – Europe + Russia + Turkey

And last year there was a large increase in the price of graphic cards due to the increase in gaming PC sales and the use of graphics cards in bitcoin mining in Russia.

ASP

Source: CONTEXT SalesWatch Distribution – Europe + Russia + Turkey

In each of these cases the root of the price increase was a shortage of components. So the parallel with the threat of tariffs is very relevant, as the major impact of the currently announced tariffs is on components and raw materials – leather (the new HP Spectre Folio), glass envelopes and fans used in computers, screws, stainless steel, printed circuit assemblies, certain monitors, and, the item which has caused Cisco and Juniper to increase their prices, switching and routing apparatus. What no procurement department wants to hear the IT vendor say is “Sorry, the tariffs are causing increases in the cost of components which means we have to put the price up by 10%”.

So, we expect that there will be standoffs and all parties will try to work round these issues.

  • IT manufacturers will get creative in the coming months to plan as effectively as possible for the next round of tariffs and return to practices from another age which in an era of ever increasing free-trade may have been forgotten. Tariff engineering is one such term – the “adapting of an item [being imported] so that [the importer doesn’t] have to pay any levy.” Is this the time to engineer out the need for fans in a computer and to find another way of achieving the same goal?
  • Switching the place where a product is manufactured may also be a choice, but this needs long-term planning, and in all likelihood, the endgame of President Trump is not to create a long-term trade war but to get a new deal with China on their level of imports from the US, and with Mexico and Europe for revised car trading deals. Apple is one of the companies potentially under threat as 100% of their smartphone production is based in China. So far, through successful lobbying they managed to get the Apple Watch out of the first wave of tariffs. But will they be as successful with the second wave in January 2019 or will they have to consider relocating smartphone production?
  • IT procurement departments will be pushing for more and more visibility into underlying component costs. This will involve both open book cost visibility of vendors sharing their own procurement data, as well as recourse to 3rd parties who provide independent verification of price indices.
  • IT procurement will also want to track closely the impact of price movements over time – increases do not flow through the supply chain immediately whilst there is inventory at the old prices. Visibility into the supply chain is vital from sell-in to distribution (for those products which go through the channel) and then to end-user. When new prices flow through, the impact should be clearly identifiable at each stage. Then in the case of tariffs, which are likely to be short-lived, transparency about the removal of the price constraint is necessary for procurement.

One of the unintended consequences of the Trump tariff war, may be a greater collaboration and transparency between procurement departments and the manufacturers of IT products, and a consequent increase in efficiency.

by MK

For more insights, please join our webinar on the 6th December, titled Technology and the trade war – navigating your way through the tariffs

webinar

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CONTEXT Brings Specialist IT Channel Insight to Argentina

At CONTEXT we’re constantly striving to bring insight and actionable market intelligence to the IT channel. Over the past three decades that central mission has seen us expand into 16 Western European countries, and even further afield: to Russia, Dubai, Japan and Brazil. We’re delighted to be taking the next step of our journey in South America by launching the first ever distributor panel in Argentina. It’s been a tough year for the channel there so far, but this is an opportune moment to offer CONTEXT’s unique market analysis, so that channel organisations can make crucial business decisions with greater confidence going forward. Continue reading

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Eurozone Blues

1999 was a momentous year for CONTEXT. Not only were we facing the Y2K bug, but at midnight on 1 January 1999, the national currencies of participating countries in Europe, aka the Eurozone, ceased to exist independently. Their exchange rates were locked at fixed rates against each other.

By then we had built up a pretty successful pan-European price tracking and comparison service, PriceWatch. It had depended for years on our ability to monitor prices and VAT rates across different countries and currencies thus enabling customers to perform apples to apples comparisons across a huge swathe of IT products, from desktops to printers to displays.

The service started in the late ’80’s thanks to a chance comment from Unisys: was there anything we could do about tracking prices as the work involved was causing them a headache? We obliged, and started turning out huge folders, updated monthly, filled with pages of indexed specifications and prices, which then graduated into – gasp – an accompanying 3.5” floppy with the data in digital form. Many a CONTEXT old-timer will remember the wrapping and binder duty into the late hours of the night to meet deadlines.

The big question we faced was this: with the introduction of the Euro, was that the death knell for our European Pricing Service? The pundits said yes. Why would any manufacturer pay for data on prices when transparency was assured thanks to the common currency?

Of course, we need not have worried. In fact, if truth be told, the manoeuvring by vendors attempting to rationalise VAT rates and prevent grey market activity gave us more work than ever before.  The PriceWatch service grew, and is now an extremely successful component of the suite of information products we provide today across the globe.

by JD

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Is distribution dead?

Distribution is dead? The provocative catch phrase spoken by CEO of the GTDC – Tim Curran in his opening speech at the recent inaugural GTDC APAC meeting in Singapore.

It was clear by the end of Tim’s presentation that the state of distribution is quite the contrary and that distribution is thriving more than ever before. He spoke of the continued acceleration in the advancement of technology, the shift towards Cloud and the as-a-service model bringing with it annuity income and a host of different opportunities; that value-added services now define distribution and simple box moving is not enough anymore. It was like a group of paparazzi had descended on the room when Tim presented his slide on over 42 value added services that distributors can and should have in their repertoire.

The event was attended by senior executives from major regional distributors including: SiS, Innovix, Ingram Micro, Westcon-Comstor, TechData, Arrow ECS, Synnex & Compuage Infocom with many of the top Vendor brands present there too. There was no shortage of discussions, interest and a willingness to learn and share information and experiences.

GTDC_APAC-Recap-Page_Gropu-Photo2

I think that most attending would agree that the panel discussion hosted by Peter van den Berg (GM GTDC EMEA & APAC) was a highlight, senior executives from Compuage Infocom, Huawei, Ingram Micro, Red Hat and Westcon-Comstor commented on the most common misunderstandings between distributors and vendors and how to minimize pain points.

The group’s agreement covered the following important points:

  • The Enterprise space is growing at a rapid rate and vendors are asking distribution to do more,
  • End point device distribution is still important but more so the pre-sales, post-sales and training offerings provided,
  • The 2-tier distribution model is under immense pressure and traditional IT resellers need to adapt to survive – therefore enablement & training is key whilst also looking to new partners and how to better serve them.

It was the first GTDC APAC summit – CONTEXT is proud to have been associated with the event, and we look forward to many more, and to the growth of the GTDC presence in this region.

by CV

 

 

 

 

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Why using the right type of Analytics is the most important factor in gaining true insight

Everyone in the market research industry knows that we’re drowning in data. But the mere fact that there is lots of it, doesn’t necessarily mean it’s more useful than back in 2013 when there was only about 1/8th of today’s total available amount [1]. The key is whether that data is A. ‘analysable’ (i.e. databased, processed, categorised and readily available), and B. analysed well. Continue reading

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35 Years and counting… stories from the IT frontline

To mark CONTEXT’s 35th year anniversary, co-founder and CEO Jeremy Davies reflects on the state of computing during the early days at CONTEXT.

Starting a small business means adapting your needs to serious budgetary constraints. You need that 20MB hard drive, but can you afford it?

Towards the end of the 1980’s, the PC revolution was in full swing, but computers were not cheap. IBM’s PC came in at around £3,000 in those days, equivalent to £6,300 in today’s value. Margins were high double digits compared to today’s meagre low single points. At one point it is said that UK Apple dealers were making so much money, the Cupertino company asked them to stop the ostentatious displays of wealth and invest in their businesses. Continue reading

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