Category Archives: Market Analysis

Engaging young leaders in building the tech industry of the future is not an option

Two weeks ago, I was at a panel meeting of the Smart Home & Buildings Association. SH&BA, which was founded in 2000, is the knowledge base for smart homes and buildings and people who live and work in them. At this meeting, young leaders from Google, Sky, Signify, Bosch Smart Home, Energenie, & the Beacon Agency presented their solutions to a competition on “how to overcome the barriers to smart home adoption.”

Tech Data, one of CONTEXT’s close partners and panellists, had agreed to sponsor the competition. Andy Dow, Group Marketing Director of Tech Data UK and a well-known figure in the channel had expressed delight to recognise the vital role that these young leaders have in shaping the smart home industry of today and the future.

After the winner was announced – 24-year-old Thomas Joy, co-founder of the Beacon Agency – we saw the video. You must watch it! SH&BA Young Leaders Winner – the Beacon Agency . Here is what one seasoned expert on smart home said when he saw it:

“As a CABA member, I learned about Beacon Agency’s video and am writing to share my praise. Their video offers some of the most sensible advice in the Smart Home space in decades…by mentioning AI and the need for tech to disappear discreetly into devices, it touches on a missing component of the “smart” home: the ability to learn and adapt automatically… I very much like Beacon Agency’s view of this market, looking at the service model instead a collection of partially connected but rather dumb products that quickly go obsolete as tech innovation evolves exponentially.”

To those of us interested in the future of smart home, Thomas delighted us with his considerable creativity and marketing flair for his vision of Smart Home as a Service.

So, this is the point – thirty-five years ago, a bunch of young twenty-year olds entered the new and emerging PC industry, and, sticking with it over the years, ended up by running it. We need to give the voice today to those young leaders who are going to run the smart home industry in future decades. This is vital because they get the underlying motivation of consumers and how to frame the proposition to them. This is perfectly illustrated in the Beacon Agency video – Thomas had very little prior experience of smart home, and yet he powerfully captured its potential.

As another seasoned smart home individual said, who has been working on smart home for the last twenty years, “we got in a top consultancy firm to assess smart home – they spent months on it and the most powerful concept they came up with was Smart Home as a Service”. Thomas got there quicker, and it is here for you to see. How do we build it? Surely with the help of our empowered young leaders.

TechData

Winner Thomas Joy is pictured with Teresa Johnston from Tech Data and Adam Simon, CONTEXT

by AS

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The UK’s most prominent retailers of smart home products are recognised through CONTEXT Go-to-Market awards

Last week, Smart Home manufacturers, retailers and distributors gathered at the 5th bi-annual Retailer & Manufacturer panel meeting of the Smart Homes & Building Association (SH&BA), and recognised those retailers which have the highest brand awareness for the sale of smart home products and services.

CONTEXT tracks the evolution of the smart home industry through its annual smart home research, which also unveiled a much-prized element of that research – the leading retailers of smart home products in the eyes of the consumers. The winners included:

  • For the retail channel: In first place was John Lewis & Partners, with Apple and Argos in 2nd and 3rd position
  • For the etail channel, Amazon has a strong lead in the number 1 slot, with Shop Direct in 2nd
  • For the DIY channel, B&Q maintained its leading position, though Wickes has steadily increased its number 2 place in the last three years
  • For the Utilities/Telecoms channel BT maintained a commanding lead over the other players in this channel

John Lewis through its steady dedication to the smart home category has emerged as the number 1 retailer consumers think of when buying smart home products. Their smart home demonstration areas in their shops, with the latest in the Westfield Shopping centre in Shepherds Bush, are leading the way in showing how retailers can develop the awareness and growth of this category.

Amazon has invested a lot in developing a broad smart home range and is where consumers research new products online: they, therefore, gained the highest recognition in the etail channel and overall from consumers as the place to go for smart home products. B&Q is growing its offering in smart home online and in-store, and benefits from strong brand recognition in the UK, thus securing the number 1 place in the DIY channel. Lastly, BT fresh from its recent launch of the ecommerce platform selling smart home products and trading on its strong brand recognition in the home, a powerful asset for the development of this category, won the first place in utilities/telecoms channel as to where they would go to buy smart home, and second place overall behind Amazon.

Johnlewis

John Lewis Retail award

As our research demonstrates, retail is a critical element in developing awareness of smart home gaining the highest of all scores with 36.5% of UK respondents learning about smart home in a store, and 40.8% on a retailer’s website. With Christmas coming up, and many smart home deals available online and instore, the coming weeks will be an important time for the industry, which is expecting significant year-on-year growth.

The CONTEXT Smart Home Survey 2018 is available on request by contacting marketing@contextworld.com.

by AS

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Blockchain – Real-world applications springing from the ashes of recent hype

In recent years the Middle-Eastern nations have been at the forefront of new technology adoption. An early indicator of the visionary adoption of new ‘smart’ technologies was announced in 2014, as Dubai’s leader and local government announced the Smart Dubai strategy. The aim is to “provide seamless services to the public” over 6 key pillars: Transport, Communications, Infrastructure, Electricity, Economic Services and Urban Planning. Hundreds of individual initiatives are now underway, many of which are seeing great success and rapid implementation, such as electric car charging stations, free public WiFi and monitoring stations for weather and pollution. Such huge successes in the project over the last 4 years have been repeated in other cities globally, and now many of these technologies are becoming common-place in the world’s technology capitals.

One initiative in particular, however, truly is ground-breaking and, once fully operational, will allow Dubai to call itself the world’s Blockchain capital. Through collaboration with tech giant IBM, the Smart Dubai team recently announced the Dubai Blockchain Platform – the enabler for many of the paperless, frictionless initiatives that form part of the 6-pillar strategy. IBM will build and manage the platform, which will be hosted locally in the UAE, based on their latest LinuxONE technology. This infrastructure will allow for super-high bandwidth performance and will pave the way to make the city’s systems centrally managed though a “united portal” in the coming years. As an early win, the Smart Dubai team announced that the ‘Dubai Pay Blockchain Settlement and Reconciliation System’ has already been embedded onto the platform, with the target of being the first applied initiative which will reduce friction in inter-department payments and automate many of the existing settlement processes.

Additionally, the platform will be opened up to businesses who wish to adopt Blockchain services and solutions. Until today the barriers to entry have been vast, from lack of knowledge and data science skills to the upfront cost of hardware and software required to develop a specialised system. IBM plan to create options for using the platform under a blockchain-as-a-service model, reducing those barriers and allowing for wider-spread experimentation and application. In the case of the IT channel in the region, the platform could be used as a testbed for a number of business initiatives, such as:

  • Partner Programme Management – Centralising the process of tracking purchases between a distributor and their resellers, and enabling them to rebate effectively through their loyalty programmes.
  • Through-Partner Marketing – Understanding the successfulness of marketing campaigns, through direct tracking of response rates, click-through and location information.
  • MDF Optimisation – Managed via smart contracts to ensure that funds are used appropriately, with an added bonus of tracking the ROI more efficiently.
  • … and many more

Therefore, Smart Dubai and IBM are opening up a centralised, relatively barrier-free and cost-effective method for testing the true potential of the Blockchain, beyond the hype which followed the spectacular rise and fall of cryptocurrencies in 2017/18. It goes to show that sticking with an initiative and quietly executing on it, whilst the rest of the world rides the wave of hype, really can pay off.

by TP

 

 

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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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The trends behind the headlines: register for the CONTEXT autumn webinars

IT channel businesses thrive on data. Whether you’re a reseller, a vendor or a distributor, only market data of the highest quality and accuracy will do when making those crucial business decisions. That’s why CONTEXT has become an essential partner for the channel over the past three decades. Our latest ChannelWatch Report offers unrivalled insight into key market trends and channel priorities — compiled from interviews with over 7,000 resellers across 14 countries worldwide.

Sometimes stories in the trade media are written more to generate clicks than provide considered market insight. So if you want the truth behind the headlines, register for our upcoming autumn webinar series. We’ll be offering a comprehensive review of the year from a reseller perspective, insight into emerging categories, and a discussion of how data analytics can provide much-needed visibility into the impact of the US-China trade dispute. Continue reading

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Industrial-class 3D-printer shipments up in H1 2018

On the heels of one of the largest general manufacturing shows in the world – September’s IMTS in Chicago – the Industrial 3D-printer market finds itself on a good footing with shipments during the first half of the year up +22%. Shipments of Industrial-class 3D printers which produce plastic/polymer components were +18% higher than a year ago, while those of Industrial metal 3D printers were up +30% year-on-year.

Polymer-based 3D printers accounted for 68% of all Industrial printers shipped during the first half of 2018, and the ongoing rise of shipments from HP and Carbon more than took up the slack from Stratasys which, although it remains the industry leader, continued to struggle. While Q2 was fantastic for 3D Systems, the leading publicly traded company in this market, most of its growth came from shipments of Design and Professional printers. The company began shipping new products – including the much-anticipated Figure 4 systems – in Q3, so the second half of the year is expected to be strong. While most companies focused shipments on North America and Western Europe, UnionTech remained solid largely because of its focus on China.

While Industrial-class models are not the only 3D printers on the market, this segment’s shipments represented 70% of total printer revenues in H1 2018. The Industrial class of 3D printers is currently the most closely monitored, due to its ability to disrupt the $12T global manufacturing industry.

by CC

 

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Adaptable distributors in prime position to drive growth

When it comes to analysing market trends for the IT distribution channel, invariably the devil is in the detail. Despite some worrying developments that immediately spring out from the latest CONTEXT ChannelWatch survey, a closer look reveals many reasons to be optimistic. All markets face challenges, and IT distribution’s bugbear today is the challenge from e-tailers. But this is a manifestation of an ever-evolving market. Remember the threat from direct? So those distributors who focus on new ways to differentiate and meet the changing expectations of reseller community, will be well placed to drive success going forward.

Under pressure
The CONTEXT ChannelWatch Report 2018 is developed from interviews with over 7,000 resellers to generate key insight now across 14 countries: Australia/New Zealand, Baltics, Czech Republic, France, Germany, Italy, Poland, Portugal, Russia, Slovakia, Spain, Turkey, and the UK. As such, it’s the best single piece of industry research out there for discerning key market trends and channel priorities.

This year’s report highlighted the fact that 30% of resellers polled said they bought up to 10% of their stock from these etailers, thanks to their ability to compete on price, product availability and general ease of doing business.

Yet the IT distribution market is healthy, and growing while meeting the challenge. Combined H1 18 year-on-year (YoY) revenues grew 5.1% —with all countries studied enjoying positive YoY growth.

Time for growth
IT distributors’ success is based on tactics such as focusing on solution-driven areas where they can add value by bringing their expertise to bear on complex offerings like cloud. According to predictions that this market will be worth $160bn by 2020, we estimate that if distributors can capture as much of this space as they do IT as a whole (21%), there’s a $34bn opportunity waiting. Already a new generation of “born in the cloud” distributors are bringing innovative new offerings to market.

The opportunities to differentiate don’t end here. There’s a huge range of value-added services which distributors can and are beginning to offer: from project management and logistics to licensing, technical support and much more. Yes, this will require significant investments of time and resource, especially in infrastructure and skills. But it’s increasingly what resellers are demanding of their distribution partners.

One message came across loud and clear from our interviews with global resellers, especially the smaller ones: they’d like a lot more support and training. This varied from country to country, but sales techniques, IoT and cloud (SaaS, IaaS, DaaS) and smart home skills were among those in demand. We also noted that resellers are placing an increasing emphasis on customer service. When asked what resellers liked most about their distributor, the provision of B2B customer portals jumped six places compared to last year’s survey to take the top spot.

The good news is that distributors are already investing in many new value-added services to help them differentiate. If they can find that sweet spot where the resellers recognises and is prepared to pay for the value-add of such services, rather than simply choose the lowest cost offering, there are great opportunities for growth ahead.

By JD

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