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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.

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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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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

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The PC is dead; long live the PC

Quietly, almost without many realising it, the PC that most pundits had written off as an engine for growth in the IT markets has been making a comeback. And it’s not the sort of comeback with massive volumes, queues out of the door at Aldi or PC World as consumers snap up bargains at even decreasing prices. No, this is a story about businesses, large and small, buying increasingly better spec’d PCs to handle the increasingly complex digital revolution. Average unit prices are on the increase, and chipmakers are struggling to keep up with demand.

CONTEXT figures for the first two months of Q3 2018 tracking distributor sales of PCs to resellers throughout Western Europe illustrate the trend that industry forecasters say will push the market out of decline and into growth for 2019.  PC unit sales were up +3% year-on-year while revenues grew by +5%. Average selling prices (ASPs) were also up by +2% in early Q3 2018 to €573. But same as in Q2 2018, growth came from the commercial segment. While (despite the back-to-school impetus) consumer PC sales were still in decline, businesses bought  +7% more PCs than in the same period a year ago. This demand from business buyers was boosted by companies making the transition to Windows 10, the increasing shift to mobile devices, the general need for product refreshes, and there is no sign this demand is slacking off.

The PC resurgence seems to have caught chip manufacturers by surprise. J.P. Morgan reports that Intel isn’t making enough processor chips to meet demand and the Intel processor and chipset shortage will hurt fourth-quarter 2018 PC shipments by 5% to 7%. AMD, of course, is set to benefit and has had an amazing share price run of almost 200% this year, becoming the top-performing share in the S&P 500 index for 2018.

So expect to see more devices such as HP’s sleek, leather-clad and impressively slim new Spectre Folio. While from a price and specification point of view it is well placed, it’s not cheap. Alongside PCs such as Microsoft’s Surface, it’s just the sort of device today’s businesses are looking for as they gear up to tackle the digital age.

by JD

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HPE Distribution Partner Conference

“In my end is my beginning” TS Eliot.
I think the best way to capture the recent HPE Distributor Partner Conference is to take the very closing words of the event from Paul Hunter, the Worldwide head of partner sales.

“We are humble. We are winners. We have the strength in our portfolio of products.
The channel is growing faster than the rest of our business. Have a competitor in mind. It is now all about execution.”

Each player in the tech market has their own DNA – in HPE’s case long-standing relations with the channel and an understated but competitive approach to business. As the CONTEXT numbers show, they are the #1 in value distribution in Europe and Russia with 18.1% market share, and after two years of transformation following the demerger on one hand and the acquisition of new products they are doing everything to stay in that position. The end of the conference was a new beginning – the gauntlet was thrown down to the channel to pick up these products and run with them, and to focus on execution.

HPE senior management were open with one-to-one meetings, and a Q&A session at the end where they literally bounced ideas around the room through the use of a microphone wrapped in a soft ball.

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The HPE leadership team on stage for Q&A

They had commissioned proprietary research from CONTEXT which we shared openly with the delegates showing both the distributor perception of the strength of the HPE go-to-market proposition as well as the areas where they felt they needed more support.

For CONTEXT it was a privilege to be there and to meet distributors from across the world. Literally there was barely a geography that was not represented and so we were able to link up with people from Latam, Africa, and Asia-Pacific as well as Europe and the Middle East. We look forward to developing those relationships in the coming months and coming back with channel results from new places which we can add to our already global panel.

A personal favourite moment for me was the presentation by Bob da Vita of the Simplivity product. He managed to squeeze into 15 minutes what he would normally do in 1 hour minimum. But less is more as all of the 15 minute presentations demonstrated and I came away with a sense of the excitement of the hyper-converged infrastructure market, which we are following closely in CONTEXT. Indeed we are launching this month a new report on integrated systems using virtual categories and covering composable infrastructure, converged systems and hyper converged systems.

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Bob da Vita presents Simplivity

Finally, to conclude, an Englishman who was young during the 1960’s, cannot omit to mention the joy and delight of having dinner aboard the Queen Elizabeth 2, or QE2, the ocean liner now moored as a hotel in Dubai, which had its maiden voyage in 1969. The QE2 was known for its world cruises, and so it was a memorable and fitting place to hold the closing dinner for a global event, after three days of being together with distributors and HPE representatives from all nations.

HPE3

The dinner menu

by AS

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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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Italy: a model of engagement between distributors and resellers

On 18th July a new forum for the channel in Italy called #DISTRICT was inaugurated in the trendy and recently renovated tech district of Milan – the initiator was G11 Media and Channel City, who invited CONTEXT to present our reseller and channel research and use the occasion to announce the distributor of the year awards for 2018.

Italy is the country, from our recent research, where resellers most like coming together at events. So in the Italian business culture it is clearly important for people to engage with each other, and keep up to date with the latest trends. The brains behind this new format, Marco Maria Lorusso, made it clear that the topics would be current, relevant, presented by experts, short in duration and long on exchange.

With that as the set-up, there was a clear hunger at the evening’s session to learn about what resellers are thinking through the results of the ChannelWatch survey. Italy is a model of engagement between distributors and resellers – it is the major European country where the participating distributors managed to achieve the highest number of reseller responses to the ChannelWatch survey – an impressive 1,610 responses. The distributors emphasised their interest in resellers expressing their voice. In a world as fragmented as the reseller community, it is important to have such opportunities, and in CONTEXT we are keen to develop the involvement of both distributor and reseller communities in all countries in this process of articulating what resellers are doing and thinking.

The results of the survey have been sent to the Italian distributors who participated in the survey – without their support it would not be possible to gain such powerful traction in the market, and we are grateful to them for this. The full ChannelWatch report will be published in early September and will be available for sale to all those interested in using this process to understand and engage with resellers in the technology industry.

Here is a link to the keynote given by Adam Simon, Global Managing Director of CONTEXT, at the evening on 18th July for those who want to have a sneak preview of the results!

by IA

 

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Plotting the Future of the Smart Home

The smart home is gaining momentum across Europe, but there’s still much to do. That’s why the work of the Smart Homes & Buildings Association (SH&BA) is so important. We provide a place for business to showcase their systems, devices, products and services, and a much-needed forum for all smart home stakeholders to share their experiences and discuss ways to overcome the hurdles facing us.

At the heart of these challenges lies interoperability, which to an extent is still proving a stubborn barrier to the kind of integrated smart home experience we all want to see.

A unified experience
At our fourth bi-annual retail and manufacturer panel meeting recently, stakeholders from across the smart home landscape converged on the offices of Avensys, where we were shown around the IoT specialist’s impressive facilities. The firm’s several showrooms, open to all members of the public, really demonstrate the potential in the smart home to change the way we live. The largest space combines kitchen, living-room, bathroom, dining-room and second living-room, each showing off different technologies but giving a sense of a unified smart home.

We agreed that a model which works together efficiently holds most potential for the mass market, rather than the kind of plug-and-play mix of individual products which meet very specific needs but can fail to resonate overall.

However, the problem still remains that many products don’t talk to each other, making the unified smart home experience a pipe dream for most consumers.

Starting from scratch
One cause for optimism for the future comes from the new build space. Mark Swift, founder of Home Hub installations, told us his firm has gone from cabling two houses per month to 200, and is about to sign a deal for 14,000 houses in the next year. Many of these are integrating the open SmartThings platform, promising a unified experience for the buildings once completed.

Partnerships are of course key to driving this vision of the integrated smart home. On a bigger scale, Amazon’s recent tie-up with Lennar Homes, the second largest housebuilder in the US, also offers grounds for optimism. We also heard how the IET is currently producing guidance for electricians on smart home installation, which will help drive progress in this space.

Looking ahead
While interoperability is a big success factor for the smart home, there are others. Consumers also need to trust in the retailers and brands they’re investing in, and be assured that the tech they buy will last long into the future. As an industry, we also need to ensure that consumers are informed about the potential cyber-related risks associated with the smart home and how to manage them. SH&BA produced guidance around this in November 2015 and we’re looking to the industry to get proactive in this area.

Helping us to shape the future of the smart home going forward will be a new SH&BA initiative: the Smart Home Young Leaders’ Forum. This cross-industry group will seek to better understand the different ways that young professionals under 35 years of age who work in the smart home industry are engaging with technology in order to help companies transition from old to new smart home technologies. We’re looking forward to seeing what it can achieve, because the smart home will only succeed if we continue to build out these networks, partnerships and interconnections. The first meeting of the Young Leaders’ Forum will take place at IFA in Berlin on 3rd September at 4pm. All details can be found in the link to the event – To find out more click SH&BA YOUNG LEADERS’ FORUM @ IFA – REGISTRATION LINK

by AS

 

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