Hardware declines widen for the channel as COVID-19 hits - Context

Hardware has been the worst hit segment of the enterprise channel market in the first four months of this year, according to the latest figures from channel analyst firm Context.

Its latest data shows that enterprise hardware revenue declines have widened from 1 per cent year on year in January, to 11 per cent in March and 17 per cent in April.

Context's head of enterprise, Gurvan Meyer, said the market has been strongly impacted by the suspension of projects during the crisis.

"While the COVID crisis has evidently impacted sales volumes in March and April, long-term drivers are of greater significance to datacentre infrastructure, with the move from on-premise to cloud affecting negatively the sales of mainstream servers and storage systems through distribution," he said.

The products worst hit between January to April are servers (down 10 per cent during that time period) large format displays (down eight per cent) and disk arrays - (down seven per cent). 

However, within hardware, some sectors like computing components continue to do well.

Context found that in contrast, services revenues grew by four per cent in April.

Meanwhile software revenues were at 10 per cent growth year on year in January, and four per cent year on year growth in April.

Meyer said the resilience of services demonstrated how essential businesses have found keeping IT infrastructure going during lockdown, adding:

"If this crisis had happened 10 years ago, the industry would have had great difficulty to assure this continuous support.

"Resellers have been able to maintain consultancy and professional services and the same is true for run services from distributors with advances in tech that allow working from home using corporate tooling/tunnelling while ensuring that security considerations continue to be adhered to."

Geographically, the European channel is now faring better than its North American counterpart.

Overall, the European IT channel bounced back into positive revenue growth in the four weeks to week 19 (ending 10 May) with figures of 3.4 per cent year on year, versus declines of 1.2 per cent the previous week.

Meanwhile, the US has continued to decline in week 19, showing a slump of seven per cent, compared to a 3.7 per cent decline the previous week. 

However, looking ahead to the next quarter, Context is forecasting a decline in revenue growth in Europe of 4.1 per cent.

"The positive signs are that in Italy, Belgium and Spain revenue is starting to climb, whilst in the UK, a shortage of big deals is having a negative impact.

"However, the overall 4.1 per cent decline for Q2 should be put in perspective with the much larger predicted Euro area GDP decline of 12.5 per cent in the period. Traditionally we talk about the performance of the IT industry as 1-2 per cent better than GDP but it is performing much better than that," Gurvan said.

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• Topics
• Solution Provider
• COVID-19
• Context
• Europe
• North America
• hardware
• services