State of the Market

The current economic climate, and tight credit availability have certainly taken a toll on the IT industry. Within this challenging environment, where consumer spending has curtailed, pricing has never been as important for manufacturers and retailers.

The IT sector in Q1 2009 experienced one of its worst quarterly growth periods to date, with total unit sales declining by 15 per cent versus Q1 2008. With the exception of a few segments still showing some growth, consumer demand for IT goods has significantly slowed down in 2009. Unfortunately, the decline has been significant in value terms, down seven per cent for the same compared period, driven by deep discounting and promotion of key product lines.

The biggest news come from the PC market where, after a long period of healthy growth, notebook PCs are having to compete for consumers’ pounds with lower value netbooks. Netbooks have been the unit growth driver in the mobile PC market during the first quarter of 2009, putting a lot of pressure on low-priced notebooks.

Notebook PCs remain the key volume generator in the industry, but falling prices are of high concern. Despite the increase in unit sales, value has now worryingly gone into red. It is obvious that price is a key decision factor for the consumer these days and retailers are now targeting low price points in an effort to stimulate sales. And with price points around the £200 mark, the netbook is now becoming the most affordable portable computer, covering most of the average PC user’s day-to-day needs.

Due to the strong entrance of netbooks into the mobile PC market, along with the rise in subsidised laptop sales and mobile broadband, the total mobile PC average selling price has fallen by 20 per cent in Q1 2009 versus Q1 2008, resulting for the first time in flat value growth for the category – which has hit harder in the consumer channel.

An interesting trend emerging in the market has been the growth of proportionately low-cost, all-in-one PCs, taking important share from the monitor market, which already suffers from the growing popularity of mobile PCs. All-in-ones saw an increase of 28 per cent in volume and value Q1 2009 versus Q1 2008, whilst monitors are in heavy decline, down 48 per cent and 54 per cent in volume and value respectively for the same compared quarters.

Products surrounding the PC are also suffering declines, due to aggressive offers followed by lower demand. Out of all the peripheral products, notebook mice are still a hopeful segment, showing growth due to increased popularity of those models offering wireless connectivity. Wireless mice that support the mobile PC have grown by 44 per cent in volume and 11 per cent in value quarter-on-quarter on a yearly basis.

As PC usage is increasing notably in busy wireless environments, productivity of wireless devices is a trend that is likely to develop further in 2009.