Manish Goenka of GFK talks about the positive signs shown by the IT market

IT market shows growth

GFK’s Manish Goenka explores the positive signs shown by the IT market, and if there is a price…

The month of September showed some promising results for IT, which had year-on-year growth rates of 11 per cent in volume and 6.5 per cent in value. This growth was mostly contributed by the continued exponential growth of webbooks (GFK’s term for the tablet) and marked strengthening of notebook volume growth (as a result of the fading impact of the UHA scheme* and strong price drops year-on-year). The other factors that also contributed were growth in storage, headsets, keying devices and media gateways (all of which have connectivity with mobile computers) and software growth within the business to business channel.

Webbooks showed growth of 681 per cent year-on-year for the month of September and contributed a share of four per cent in volume and 11 per cent in value to total IT for the month. With recent launches from players like Sony, Amazon, and Motorola, webbooks continue to stay in the headlines for IT.

Interestingly, notebooks started to show stronger year-on-year growth as the impact of the UHA scheme lessened in the month of September and strong year-on-year price drops encouraged sales. In September 2011, notebooks saw positive year-on-year growth in terms of volume for the second time in the last eight months. The total market for notebooks in September grew by three per cent year-on-year in terms of volume; however saw a decline of two per cent in terms of value. This is indicative of economic pressures and a commoditisation of the product.

For notebooks, growth came mostly from the consumer retail channel, which grew by six per cent in volume and one per cent in value, whereas the B2B channel witnessed declines of eight per cent in terms of volume and four per cent in value year-on-year for the month.

Netbooks continued to decline and year-on-year growth rates touched –40 per cent in the month for September. The impact of webbooks’ growth on netbooks is becoming more apparent, and positive growth of devices such as storage and headsets alongside the webbook growth perhaps provides evidence of a shift in trend from a generalized offering to a combination of devices which meet the specific needs of the individual.

Looking at the trends, total IT is likely to show more growth for remaining part of the year. The main challenge is to increase the growth in terms of value. Consumers are constantly postponing their purchase until they find that one best offer. Consumers have become more cautious of the value (rational or emotional) they would get from the product. According to GfK weekly data for notebooks from February 2011 to mid-October 2011, the correlation between year-on-year growth in terms of units and in terms of price is –0.73. Promotions around the £299-399 price point seem to be driving the growth of notebooks rather than product innovation.

Innovation in the IT category is vital to keep pumping strong continuous growth in terms of value. Can the wafer thin light weight solid state drive packed ultrabooks give the sector the energy needed at this time?

* The UHA scheme ran last year and was designed to assist over 250,000 households to purchase laptops at a subsidised price. This artificially inflated sales last year, hence impacting on year- on-year growth rates for 2011 on 2010.

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