PCR Tech and IT retail, distribution and vendor news
As it’s been one week since the public took part in a referendum that will see the UK leave the EU, PCR pulls together six interesting comments from tech execs in the UK channel.
‘It’s something we really didn’t want in the distribution channel’
Dave Atherton, Chairman, Entatech UK
"This industry is about high-value goods, bought in US dollars, and distributed at wafer-thin margins in sterling. The pound has plummeted five per cent against the dollar and so in theory, everything is five per cent more expensive. That’s a damper on sales to start off with, coupled with the fact that the Leave vote just keeps the pre-referendum uncertainty going.
"Will there be continued volatility in the currency? When will we leave, what are these ‘new trade deals’ and so on? Resellers may be entirely British concerns, but their corporate clients aren’t, and client uncertainty means delays in buying. Worse still, some pan-European end users may decide, for compliance reasons, to move their business to a reseller within the Eurozone, for reasons as simple as all equipment being CE marked, for example.
"The much-vaunted ‘new trade deals’ offered by the Leave campaigners may take years to conclude. The US and China, our principal suppliers, both said they wanted us to stay in, so there is little hope of preferential treatment.
"Nevertheless, Brexit is certainly not existential to business. The currency issue will disappear very quickly. Most small and medium enterprise clients, the most profitable part of reselling, are UK-only operations, and will continue as before. Service-based resellers will be much less affected as they are selling labour, which is paid for in pounds. It’s was the first day of summer last week, when things get quieter anyway. Hopefully by the time we get busy again in September, our political leaders will have a plan."
‘We expect to find opportunities for additional growth’
Seb James, CEO, Dixons Carphone
"The nation has spoken and there has been a vote to exit the EU in due course. As you can imagine, we have been giving some thought to this.
"Our view is that, as the strongest player in our market and despite the volatility that is the inevitable consequence of such change, we expect to find opportunities for additional growth and further consolidate our position as the leader in the UK market."
‘The Brexit has cut the UK IT spending forecast by 10%’
Matthew Ball, Principal Analyst, Canalys
"Canalys expects the uncertain future of the trading relationship between the UK and the EU will hit UK IT spending immediately. Unemployment and inflation in the UK are low, and the economic outlook was positive.
"The decision to leave changes this outlook, resulting in a range of short- and longer-term implications, the extent of which will be unclear for months, if not years, as it is expected to take at least two years for the UK and the EU to negotiate exit and new trading terms.
"Canalys’ IT spending forecast, based on the UK remaining in the EU, was in the range of $90 billion to $100 billion in the UK. Canalys now expects this to fall by up to 10 per cent in 2016, based on the public sector and businesses cutting expenditure to reduce risk.
"The outlook for 2017 could be even worse, with up to a 15 per cent decline as IT budgets are set lower on the prediction of a tough year ahead and ongoing uncertainty."
‘Customers who think prices will rise are buying now – and this has boosted our sales’
David Scott, Business Development Manager, Cyberpower UK
"The Brexit vote came as a very big surprise to us at Cyberpower UK, but I feel it will not affect business as much as other industries. Since we focus on the gaming PC market and have a customer base that is 95 per cent in the UK, we feel that our long term future will be unaffected.
"I cannot imagine when the dust settles that the EU will want to limit trade with the UK considering how much trading was going on cross borders. The short term problems are an obvious reaction that the pound would suffer against the dollar and euro, but hopefully it should only take a few weeks to get back to similar levels like last year.
"We have not seen a decline in sales since the vote was cast so I believe the fact some customers think the prices will go even higher is boosting sales after the referendum, and hopefully once the exchange rate rises again we can carry on as normal.
"I think the fact gamers want a local warranty on a product means we have a large UK customer base and that the only affect on our industry will become a short term price rise. Unless the UK enters another recession the PC gaming market will still have a large customer base it is down to other industries to make sure the UK population have enough jobs to afford such luxury items."
‘This is the single worst decision of the 21st Century and will put our economy into a recession’
Anonymous, senior UK tech distribution source
"Brexit has affected the components market drastically, which in turn will affect the reselling of PCs, laptops and all IT using components. As components are sold by vendor in USD you’ll see a 10 to 14 per cent rise in prices on components and as such the same on resell prices on PCs, laptops and so forth.
"Whether or not the consumer, with the current high austerity measures, uncertainty of government and what direction the UK will take, will be happy to pay more is a different question. In all it will slow market sales down in the UK.
"Ironically I believe that additional measures will also take place and it will put our economy into a recession. Why? Primarily because when a trade agreement via the EU was initially agreed, it would have had the buying power of 24 member states. That would give real negotiation power to the EU to enhance terms of the agreement.
"I know a lot of people under the ages of 50 that feel like their liberty and their children’s liberty has been taken away from them by a vote they did not ever want to participate in. Opportunity is also lower now for young people, as a member of the EU you had working rights to work in any EU member state without a visa – as two million Brits took the opportunity to do. With that removed, it reduces opportunities for the young. It’s the single worst decision of the 21st Century in my opinion."
‘Uncertainty creates opportunities’
Kamal Hitari, Founder and MD, Hitari.co.uk
"Uncertainty creates opportunities. It’s a shame that such a crucial matter was left to the general public to decide, which goes against the idea of having representatives in the house of Parliament who are paid to make informed decision based on detailed understanding of issues.
"In or out will have a major global impact, both positive and negative for businesses, we just have to wait and see. In the short term, there is a small opportunity to increase export due the currency dropping in value, but either way it is very early to predict how this will play out, as general referendums are not legally binding so a new government can simply dismiss the result and remain in the EU."
Check out more reaction and analysis in the August issue of PCR
