Tag Archives: technology

Q2 Round-up: New iPad Launch Softens Consumer Slate Sales Slump

With unrivalled insight into the Western Europe ICT supply chain, CONTEXT has been following with interest the evolution of the PC and mobile computing market. In many ways, Q2 saw a continuation of trends, with PC volume sales continuing to fall and consumer tablet demand remaining weak as buyers divert their spending to smartphones.

However, as always, there were some interesting caveats behind the headline statistics, not least the impressive performance of the new iPad launched in March.

Tablets and detachables
It’s true that overall consumer tablet demand remained weak during the second quarter. Shoppers continued to shift their budgets to other technologies that have come to represent the content consumption devices of choice in this market segment. Larger screened smartphones in particular have become popular for activities like writing emails and using apps as they’re always on and close-at-hand for consumers.

However, year-on-year volume decline was softened somewhat thanks to the launch in March of Apple’s seventh generation iPad. The 9.7in tablet is more powerful than the iPad Air 2 but also heavier and lacking several of the latter’s features such as a Smart Connector, and fully laminated, anti-reflective screen. However, its relatively low-price tag seems to have attracted consumers in large numbers and it sold well in Q2.

This is not unusual for Apple products, which often see strong initial sales. But if consumers continue to flock to the model, it would seem to suggest there’s a need for a high-quality iPad option with a price point more in line with current market trends.

Elsewhere, business detachables continued to grow year-on-year in Q2, dominated by Apple and Microsoft products but with Lenovo making impressive inroads. New products such as Apple’s iPad Pro with a 10.5in screen and Microsoft’s fifth generation Surface Pro helped drive this growth. Business detachables still aren’t selling in huge volumes, but it was one of the few segments to post growth in the quarter.

PC Average Selling Prices continue to rise
On the face of it, the PC market overall saw a bigger than expected drop of -15% year-on-year in terms of volume sales. However, there’s more to this trend than meets the eye. For one, Q2 2017 had fewer trading days than the same period last year and some April sales had been brought forward to March in anticipation of rising prices.

Despite weak demand in some segments, the quarter fared better from a revenue perspective, down just -2% year-on-year as average selling prices (ASPs) continued to rise. The growth in ASPs year-on-year continues to be driven by a blend of currency, component costs and a richer product mix; with the shift to high-end models a welcome continued trend.

Weaker-than-expected sell-through meant that inventory levels are a bit higher than desired, but not worryingly so. It’s likely that the “back-to-school” period will be used to get rid of extra stock, driving a reduction in pricing quarter-on-quarter.

by MCP

 

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Filed under Enterprise IT, IT Pricing, Mobile technology, PCs

Service is at the heart of Dixons Carphone’s long-term ambitions

While positive short-term results may grab the headlines, the real story is how longer-term transformation positions Dixons Carphone for future success

Positive financials are the backdrop
Given the potential pricing and downward margin pressures of BREXIT, investors were pleased at the end of June with Dixons Carphone producing an enviable set of retail results. Much focus was on the impressive growth in profit before tax of 10%, to above £500 million, with 4% increase in like-for-like revenues.

The other bottom line from the CEO: “Customer relationships are everything”
While the top line numbers headline the financial achievement of Sebastian James and team, it is the long-term transformation plans of Dixons Carphone which capture the imagination, and forecast the pillars of future success. Sebastian James highlighted transformation strategies focused on building a long-term future for Dixons Carphone:

  • Channel agnostic
  • Service as core offer and differentiator
  • Transition from ownership to consumption
  • Lifetime value relationships

Personalisation for consumption + differentiate services = Lifetime Value
The commentary highlighted the transformation of how service is now a core offering, not just an attach to the sale of a product. Services such as warranty, maintenance, and repair are creating a predictable, profitable revenue stream and a deep ongoing relationship with consumers.

Whilst mobile and phones were highlighted as one of the most challenging categories due to the rise of SIM free phones, James’s commentary emphasised how there is an aggressive plan for both financing and leasing to increase phone replacement.

To differentiate service, Dixons Carphone will roll out same day phone repair services. Plans also indicate a breakthrough 7-day repair promise compared to 28-day market standard. These strategies not only differentiate Dixons Carphone, but create positive lifetime relationships beyond the sale of a handset. A NPS (Net Promoter Score) in the 90s is particularly noteworthy and evidence of positive customer response.

Last year Sebastian James pledged to increase service income from £500mn to £1 billion. We did not hear any specific numbers on the investor call on progress towards this goal. At £1bn, services revenue would represent 10% of today’s revenues, and would outstrip Best Buy currently at 7%. Clearly both national tech retailers are seeing a bright future in services both as a differentiator and profit stream to offset product margin pressures.

Dixons Carphone is well positioned to profit as the “Digital Plumber”
One of the most exciting and innovative long-term developments is Dixons Carphone’s journey to becoming the digital plumber of the nation in its joint venture with SSE, briefly referred to in the presentation. It is all about occupying a place of trust in people’s homes, making life easy for the customer through leveraging the Knowhow expertise of Dixons Carphone and supporting SSE’s 5 million smart-meter customers. If the two companies can make this work, they will have moved the point of sale from the store and the smartphone into the home, a new offline revolution for tech retail.

The store as destination for new technology
There is one area where Dixons Carphone is lagging the market, and that is making the store a destination for experiencing new technology. Given that Oculus Rift and HTC Vive were launched at the end of last year, not enough has been done to create experiences for customers. The price-point of Virtual Reality is evidently beyond the purse of most consumers, but customers are looking to retailers to take a lead in demonstrating this and other new technology such as smart home. We did note, however, that in next year’s plans Dixons Carphone will be introducing a new in store gaming proposition and look forward to seeing what they do for this growing category.

Positive short-term results complimented by strategy with promising trends
Beyond the top line numbers, reaching more than £1 billion in online electrical sales is a significant milestone. The projected 24% average annual growth in home delivery, and one day delivery coming in the next year, Dixons Carphone is strategically positioned i) to capitalise on one of the largest customer bases ii) to be more profitable than a pure play business, with the capability to leverage its personalised “My Account” approach iii) to sustain customer relationships that translate into profitable life time value.

by AS

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Filed under Connectivity, IT Distribution, Market Analysis, PCs, Retail, Retail in CONTEXT, Smart Technology, Tablet PCs

A Take On Tech

Becky Connolly is an A-Level student who is doing work experience at CONTEXT. Given the recent survey results showing the passion of 18-24 year-olds for Smart Home products, we asked her to give her perspective on technology as a member of Generation Z.

Having come to my work experience at CONTEXT, I joined armed with nerves, excitement and my Mac. That’s right, I’m part of the BYOD generation (Bring Your Own Device), where we bring our beloved laptops, phones and tablets in fear of the unknown technology that may be lying ahead of us. Our Generation is famous for its insatiable appetite for the latest and greatest technology- the most popular connotations of Generation Z being a square-eyed teenager (often looking like a zombie) completely fixated by their devices; be it phone, laptop or television screen. But how does our perspective differ to that of older people, including millennials?

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Importance of technology
Technology has captivated our lives. I use technology in any way possible which will enhance features of my life in a few types and swipes which nowadays is becoming easier and easier.

Technology is not only used for social media, despite the heavy connotations (having said that, I am an avid Snapchat user). A large influence of technology is instilled in us from childhood, via the use of technology in classrooms; seeing as 77% of teachers use it for instruction as 81% of teachers believe that it can enrich classroom learning. Having adapted to technology through my education I have become not only more adept to technology but dependent on it for my studies; apps such as Quizlet and SimpleMind contained the sources of my revision for eight out of my ten GCSE subjects. Needless to say, technology was VERY important to me during this course.

An environment that appeals to younger generations
As the technology world blossoms, develops and shuttles into full speed, so do the minds of Generation Z. The answer is this; to attract the younger generation, the workplaces have to advance much further in an attempt to keep up with technology. If you have “dinosaur” computers which are inexplicably slow and missing out on features which are now just the “basics” paired with caveman wifi, the appeal (no matter how cool the job) will be gone, for example- if I were offered two jobs (and I liked both) and in one office there were state-of-the-art Macs and iPads dotted around everywhere, and the other used the same technology that Shakespeare used to write Macbeth, let’s just say I’d go for the former- wouldn’t you?

Furthermore, if your job entails a flair of creativity that initially could not be expressed through technology but now can be, it is essential for the young, talented recruits to have access to the advanced technology so that they can use it and develop their skills to the highest standard. Using the latest technology would also enable flexibility of the workplace. Technology-based work ensures that one can access their work in the office, at home or even abroad. This creates a sense of continuity for the worker and the company and assures that work is accessible from anywhere.

Technology investments worth making
Alongside many people of Generation Z, my prize possession is my phone; this is not uncommon, seeing as 88% of teenagers own phones, and 84% of them are smartphones. This shows that teenagers are willing to invest more in their technology for the better features. Right now, the favoured model is an iPhone; their perfect compatibility for the demands of Generation Z including social media, video streaming and education means that the price of £599 is often met and in high demand. It seems extortionate, but their dependability, fast-response and daily use make them a more worthy investment than a holiday, which would only last a few days.

As far as hopes are concerned, one cannot even begin to hope or imagine how far technology will develop over the years; if somebody told me that I’d be buying my latte via my thumbprint a few years ago… let’s just say technology is astonishing, awe-inspiring and unimaginable, really.

 

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Filed under Mobile technology, PCs, Retail, Smart Home, Smart Technology

At the heart of the CIO’s agenda: Business analytics is the stand-out technology investment in 2017

The recently published “State of IT” 2017 annual survey by Salesforce reveals that IT in industry is experiencing the biggest historical shift of its role to date, from a straightforward cost centre to a service delivering value and innovation, the “central nervous system” of modern business, “partnering with departments to orchestrate experiences with connected data sources and new capabilities”.

With this has come a significant change in the role of the Chief information officer (CIO). No longer just there to keep the lights on, the CIO is increasingly at the heart of the enterprise providing more customer-focused business analytics. Vala Afshar, Salesforce Chief Digital Evangelist, writes that “to be successful, modern CIOs must abandon their tendencies toward control and adopt an outlook that is more collaborative and customer-centric than ever.” There is evidence already that this attitude is becoming commonplace, with 61% of IT leaders saying that providing a single view of the customer is a high priority over the next 12–18 months.

Despite this shift, there remains an uncomfortable mismatch between business strategy and expectations, as CIO priorities are evolving rapidly but traditional views of the CIO as chiefly an operational role are yet to be shrugged off. The Salesforce survey found that 77% of IT leaders now view IT as an extension/partner of business units rather than a separate function. Yet a CIO survey by Deloitte’s found that while 78% of the CIOs polled said that strategic alignment on IT was essential to their success, only 36% ranked their organisation as “excellent” or “leading” in this capability.

A look at IT distribution
Like the business CIO, technology distributors worldwide are intent on making analytics a key area of investment. GTDC’s recently published report, “Insights into 2017 – Channel Executives and distribution leaders share their partner perspectives”, considered analytics as a key focus for distributors. Far from being a new area, analytics in 2017 promises distributors further innovation, incremental revenue and profit potential through the development of complex business intelligence (BI) solutions. As one Distribution executive put it:

“We’re using Analytics to identify opportunities for our business partners. For example, bringing new products to partners. We continually do an analysis of customers for the last two years. We have to move faster in investing in some next-generation areas and help our partners learn how to monetize these new opportunities. That’s really key for us.” — Miriam Murphy, Senior Vice President, North Region EMEA, Avnet TS.

Key questions for CONTEXT’s upcoming Channel Research Group
CONTEXT will be exploring the role of BI and analytics in the inaugural meeting of its Channel Research Group on May 30th in London, UK, asking the following questions to its Distribution, Reseller and Vendor partners:

  • What kind of opportunity is BI/Analytics to your business?
  • Has your company benefited from BI/Analytics information provided by a 3rd party?
  • How are you currently investing in BI? Is this for your own business or to help your partners develop BI solutions in their business?

For more information on CONTEXT’s Channel Research Group, please contact us!

by CS

 

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Don’t dismiss the Printer

I wondered why IT sales are doing so well, despite these extraordinary, uncertain times with Brexit, growing isolationism across the rest of Europe and insults thrown between Trump and Korea. According to the latest figures from the CONTEXT Distribution panel, revenues are up in the Eurozone by 6.7% compared to last year, with the UK steaming ahead with revenue growth of nearly 13%.

My colleagues are often blogging about the exciting new or “interesting” products that start to appear in our sales data – wearable devices, 3D printers, games consoles, mobile phones. Printers, on the other hand, can sometimes be overlooked but this is a market not to be ignored. In fact, in Germany, which represents around 20% of all revenues we pick up from the Distribution channel for IT products, Printing Consumables is ranked 2nd, behind only mobile computing. A similar picture emerges for France and the UK.

So, what is impacting the print market at the moment? We notice, particularly in the UK, workplaces transforming as millennials are looking beyond the traditional office. Working from home is increasing motivation and productivity and new technology is changing the way we work. Vendors are faced with new opportunities, and are rising to the challenge of how to best support the customers’ needs, be it savings on print costs, digitization, unified platforms – essentially, solutions for wherever your ‘office’ is at this precise moment.

Each quarter, the shift is moving from single to multi-function printers. We demand more from a printer than just printing. Unit sales of Inkjet and Laser multi-function printers grew around 6% in Q1 this year and now account for around 70% of all printers sold in Western Europe.

Inkjets are marking their return in the B2B sector with consistent double digit revenue growth of both the consumer and the business inkjets since Q2 2016. With more emphasis on lower print costs for businesses, vendors, particularly Epson and HP, are moving further into the higher price bands with revenues for business inkjets over Euro 400 growing by 37% year-on-year in Q1 2017. Business inkjets now account for almost 40% of all printer revenue in the SMB channel.

Finally, we’re also seeing a return in consumer confidence in some of the countries that have been struggling in the last couple of years. Spain has demonstrated an overall growth year-on-year of 16% in the print market, with a 12% growth in IT sales overall.

So, World disorder? I guess so, but business goes on and the printer market is still alive and well.

by DC

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B2B – a risk for the channel or a missed opportunity for tech retailers?

The recent news about Amazon launching its B2B activity in Europe, starting in Germany, has generated a lot of press coverage. In the US it is reported that in the last two years the number of business customers shopping at Amazon has increased from 200,000 to 400,000, so resellers in Europe are concerned. “Amazon’s B2B challenge is a danger for the Channel,” was the headline on CRN UK’s front page.

So is this news a risk to the channel or in fact a missed opportunity for retailers?

Three years ago CONTEXT ran a conference which highlighted the opportunity of what we named “R2B” short for “Retail-to-Business”. Many retailers from across Europe attended this conference, but very few had the real commitment to make it happen. So will the news of Amazon’s arrival in this space make them wonder if they missed an opportunity? Surely if Amazon, with no stores, no experience of providing human-to-human customer service, and no expertise in business IT, can go for this sector, then the tech retailers can do so also.

Successful retailers in B2B are those who have invested in a service capability. Best Buy and the Geek Squad, DixonsCarphone and Knowhow, the Darty van with “le contrat de confiance” emblazoned on it – these are the retailers that have invested in service. Sebastian James, CEO of DixonsCarphone, said at Retail Week Live in March 2015 “if we don’t invest in the whole chain we risk to become irrelevant”. Some etailers have also managed to create a space in this area – an example is LDLC in France which has set up a nationwide network of resellers who help their business customers to install and maintain their IT equipment.

If a retailer is keen to take on Amazon in the B2B area here are the 5 key steps to follow:

  1. Identification and targeting of business customers through the use of CRM and intelligent sales activity – for example, every time a customer asks for a VAT invoice, this is a sure sign that they are a business; or when they purchase more than 2 of any machine, this should be a sign. Human interaction with the customer is important, as well as the posing of key questions online. On Staples website, the very first action is to identify yourself as a business or as a normal customer
  2. Curation of business SKU’s – with the support of vendors, retail is a way of targeting incremental sales from small businesses of less than 25 seats. But it is necessary to have the right products, which are not always made available to retailers. You can buy a Lenovo Thinkpad for a B2B customer on PCWorldbusinessonline, at Amazon.co.uk, at LDLC but not at Fnac, Darty, El Corte Ingles or even Media Saturn.
  3. Category management to drive out the optimal product mix – the business SKU is part of an ecosystem – understanding the upselling opportunities to meet the full needs of the business customer is a key element of success. R2B market data is a vital support for retailers by showing top selling products and typical market baskets.
  4. Service at every stage – the business customer needs service in store, online, at the point of installation and support in maintaining equipment in a functioning state. This is the most demanding element of the proposition in terms of investment. Recently, I asked the CEO of a retailer in the Middle East if he was concerned about Amazon’s purchase of Souk.com, and he said “No! We will differentiate ourselves through our service offering.”
  5. Financing of small businesses – this is a key activity which helps SMB to survive and grow. Healthy credit terms and even loans help small and medium businesses to expand without fear of cashflow shortage.

It is not too late for retailers to enter into this space, and capture a market which is at risk from the ever-innovative and expanding Leviathan which is Amazon.

by AS

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3D Printing running shoes: Why the adidas announcement is different!

This month the German footwear brand adidas announced a partnership with 3D Printer start-up Carbon for their Futurecraft 4D program, a new initiative to leverage 3D Printing to make running shoe midsoles. Last year, when first announcing their new Multi Jet Fusion 3D Printing process, HP also announced a partnership with a footwear company (Nike). The past few years have also seen various announcements from New Balance, Under Armour and a host of others. Prior to this announcement from adidas however, most companies touted their use of 3D Printing as a technology to accelerate prototyping or as an “experimental” technology, essentially just beginning to uncover what 3D Printing might be able to do for them. This announcement from adidas takes the industry one step further in that it indicates that it will begin to use the unique Carbon 3D Printing technology (and material) to produce the running soles for its new line by firstly making 5,000 pair this year and then 100,000 pair by next year.

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This hits at the heart of the next hurdle for the 3D Printing industry, moving away from just prototyping and cracking more into gargantuan manufacturing industry. 3D printing excels in the production of complex parts, in one-off production, in on-demand and in “mass customization” (think hearing aids and invisible orthodontia braces both of which have been made using 3D Printing for a long time). 3D Printing has not been able to compete against tried-and-true manufacturing techniques like injection-moulding (or “molding” as I spell it) for producing say millions of smartphone cases or office chairs (and maybe never will) but for lower volume production it is now starting to make inroads into mass production.

Carbon’s CLIP 3D Printing technology is a twist on one of the original 3D Printing technologies (there are at least 7 core technologies) and is relatively new to the market. The general technology uses a laser or light source to harden a liquid polymer (plastic) resin material layer-by-layer to build a part from the ground-up (or top down sometimes). The twist on this age old technology (technically called Vat Photopolymerization) is that the Carbon printer allows for this process to be sped up considerably and allows for new materials to be used. While adidas and Carbon noted the longer term intention of offering specialized soles for each purchaser (harkening to the “mass customization” abilities of 3D Printing), what is actually more newsworthy is the mass production aspect of the partnership. As Carbon and others speed up the 3D printing process, this is BIG news in the 3D Printing industry which is definitely looking for a spark to help it move into its next phase of evolution, mass-production.

In the sub-segment of metal 3D Printing (which uses totally different techniques), great progress has already been made moving that side of the industry into production (highlighted and validated most recently by GE’s continued progress in the space) but on the Plastics side of the industry, most printers are still used principally for prototyping (or mass customization and the like as noted above). If adidas and Carbon can fulfill on their promise of producing 100,000 running shoe soles next year economically, then indeed the market will we well on its way from evolving from the $5B industry it is today into a $17B industry in the next 5 years.

by CC

 

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