March 2020

Welcome to this month's IT Market Alert from KnowledgeBus. This alert is designed to deliver some key market knowledge viewed during February 2020 that should help you get more from your IT procurement going forwards.

 

Executive Summary

  • Coronavirus fears permeated the markets
  • PC sales fell as supply chain problems hit
  • UK printer sales among the worst in Europe

45,469

The largest number of price increases happened on February 25th, with 45,469.

Jump to Monthly Stats

The biggest news for the channel this month, as for the rest of the economy, was of course the ongoing spread of the COVID-19 coronavirus, with at least one major investor suggesting that it could spark a 20% pullback in the technology markets overall. The virus is beginning to show up in supplier revenue forecasts. Lite-On expects Q1 revenues to drop 20-30% due to the outbreak, and Apple issued a profit warning as a direct result of the outbreak's effect on Chinese production capacity, causing stocks to slide and equity to rise.

Semiconductor sales are recovering after a rocky 2019, but COVID-19 along with general unrest around global trade could mitigate that growth, warn industry commentators. Printer sales in Western Europe are down, with the UK among the hardest hit. Analysis suggests that the printer decline isn't a short-term reaction to virus-induced supply chain problems - it's a more fundamental problem that foreshadows ongoing losses.

 

Exchange Rate

Economic turbulence gave the euro a bumpy ride during February. News emerged mid-month that Germany, widely regarded as the engine of the EU economy, was flatlining as a slowdown in spending and exports wiped out growth. This accompanied news that Eurozone growth had hit a seven-year low at just 0.1%.

The euro began February on a high against the USD at 1.109, but then began a long downward trend that saw it bottom out at 1.0796 on Feb 20. It ended with a rally that began gently at first, reaching 1.0877 on Feb 26, before rising sharply over the final two days to end the month at 1.1004.

British Pound (GBP) per 1 Euro (EUR)

Things were more volatile against the GBP. The euro began the month at 0.8400 and rose quickly to 0.8491 on Feb 4. Then it ranged between 0.8465 and 0.8486 through Feb 9 before diving to 0.8301 on Feb 15. A rise to 0.8375 on Feb 20 preceded a flat period through Feb 25, before spiking to a high of 0.8564 at the month's end.

US Dollar (USD) per 1 Euro (EUR)

Euro (EUR) per 1 British Pound (GBP)

US Dollar (USD) per 1 British Pound (GBP)

Price Changes and News Through February 2020

 

Phones and Tablets

 

Gartner said that global smartphone sales fell 0.4% YoY in Q4 2019 and 1% overall in 2019. Apple and Xiaomi were the only vendors in the top five to achieve growth, it noted. Samsung maintained its number one spot in Q4 with a 17.3% market share, representing 70.4m units. Its shipments and market share remained unchanged from last year.

The iPhone XR dominated the smartphone market in 2019, said Omdia, shipping 46.3m models in 2019. This was more than twice the 23.1m units it shipped in the prior year. The iPhone 11 scored second place, with Samsung's Galaxy A10 taking the third spot with 30.3m units.

Samsung, Sony, and Sharp are the latest additions to Qualcomm's roster of 5G handset makers. Their phones are some of 70 planned devices using the semiconductor maker's Snapdragon 865 technology.

Digitimes Research cut its 5G smartphone shipment forecast for the second quarter in response to the COVID-19 outbreak. They'll slip 26.6% from the pre-epidemic forecast of 30m units to 22m, the company said. A lot here hinges on China's ability to contain the virus, because it's currently the primary market for 5G handsets, says Counterpoint, capturing 46% of global 5G sales in calendar 2019.

Foldable displays, which are supposed to be a major sales driver, are once again in question as reports suggest that screens on the Z Flip and Razr bubble and scratch.

Tablets will suffer from an uncertain market amid the COVID-19 outbreak, IDC said. In November last year it had originally predicted a 10.8% drop in global 2020 shipments compared to 2019. In February, it revised that forecast to -12.4%.

Traditional PCs

The COVID-19 outbreak has caused significant problems for the notebook sector. TrendForce revised its February notebook shipment forecast from 10.8m units down to 5.7m, representing a 47.6% YoY decrease. Digitimes expected a dismal Q1 as PC vendors slow down orders for ICs and related components. IDC confirmed that the virus would have an effect on personal computing devices overall. Traditional PCs would drop 7.1% this year compared to 2019, it predicted in February, revising its -4.1% November prediction.

The EMEA PC market will see a less troubling 1% decline to 72.2m in 2020, IDC said, with the strongest revenues early in the year. The market will grow 1.6% in 1H 2020, while performance will be flat in 2H. Both Intel CPU shortages and the virus will impact the Western European market in 1H 2020, analysts added.

The commercial sector will be buoyed by the remaining Windows 10 transitions and by stronger-than-expected demand for small-format commercial desktops. A lot of that growth comes from a handful of large deals in the public sector. The consumer market will stagnate, though, and shouldn't expect growth until Q4 2020, IDC concluded.

Lenovo topped worldwide traditional PC shipments with 17,832 units in Q4, representing a 24.8% market share and 6.5% growth. It wasn't the fastest-growing vendor in shipment terms, though; that honour went to Dell, which grew shipments 10.7% YoY for the quarter, reaching 12,463% for a 17.4%% market share.

Premium Ultramobiles & Wearables

TrendForce has spotted a likely decline in Q1 volume in the wearables market due to COVID-19. Some products scheduled for a 1H release may be deferred until later this year, it said. However, the major sales season for these consumer-focused products is in 2H, meaning that this category could escape significant damage if the virus can be contained in time.

Processors, MEMs, Semiconductors

Sources suggest that the spread of the virus beyond China could impact the 2020 semiconductor market, limiting recovery in the short-term. The Semiconductor Industry Association noted global January revenues of $35.4bn, down 0.3% YoY and 2.2% on the month. Sales increased YoY in China (5.2%) and the Americas (0.8%), but slipped everywhere else. European semiconductor sales slid 5.6% YoY, it said.

In the longer term, though, this market looks set to weather the situation. According to IC Insights, semiconductor sales are set to rebound, rising 7% in 2020 to exceed 1tn devices. This follows an 8% decline last year and a 7% growth in 2018, said the company. Per-wafer revenues are also increasing as demand grows for sub-7nm processes, it added. Eight-inch foundry Vanguard International Semiconductor is also bullish on orders through March, suggesting that the coronavirus is so far failing to have an effect there.

Memory

Concerns are growing about the global supply of memory chips this year as the coronavirus spreads rapidly in Korea, says DigiTimes, adding that Korean manufacturers Samsung Electronics and SK Hynix account for 73% of the global output for these devices.

DRAM revenues held steady in Q4 2019 as shipment growth offset price declines, according to TrendForce. It saw buyers increasing their procurement volumes ahead of time, leading to a modest 1.5% revenue QoQ decrease during that period. Q1 contract prices rallied as cloud service providers continued building inventory, although the analyst still expects all three dominant DRAM suppliers to post QoQ revenue drops.

Storage

Q4 NAND flash shipments increased nearly 10%, according to DRAMeXchange, with revenues spiking 8.5% to $12.5bn. Strong contract prices are likely to offset the effect of COVID-19, the company said, meaning that NAND flash revenues in Q1 should at least equal those in the prior quarter.

CONTEXT said that by the end of 2020, no new laptops in Western Europe will be sold with a hard drive as primary storage. Notebook, desktop, and workstation HDDs fell to 9.4% of total storage volumes in the region during Q4 2019, it said, adding that SSDs found their way into 93.3% of new laptop PCs during that period - up from 66.7% at the end of 2017.

 

SSDs are also becoming more popular in desktops, with 82% of those devices now including them (up from 48.5% in 2017).

The Netherlands and Nordics are already most entirely HDD-free, the company said. Germany came next, with the UK a close third. Only 9.9% of PCs sold in the UK had HDDs in Q4.

Displays

Digitimes said flat panel makers in Korea, Japan, and China have been gearing up large-sized OLEd capacity since 2H 2019. Expect more competition in this area as small- to medium-sized OLEDs see oversupply. Global shipments of OLED TVs will hit 3.5m in 2019, up 2.4m in 2018, it predicted.

TrendForce WitsView has spotted signs of a coming price increase in sub-65 inch TV panels at the end of January due to riding demand and falling supply. Conversely, monitor panel supplies will exceed demand by 20% in 2020 due to rising manufacturing capacity in China, it warned.

LCD panel makers in Wuhan were hit particularly badly by the panic stemming from the Coronavirus outbreak, with BOE Technology, China Star Optoelectronics and Tianma Microelectronics reporting a shortage of upstream materials due to limitations on transport in China.

Printers

The worldwide hardcopy peripherals market grew 0.9% in value YoY to approximately $11.9bn in Q4 2019, IDC said, representing total shipments of 25.3m (down 5.4% YoY). Epson grew shipments the most at 1.4% YoY, totaling 4.8m in shipments. HP still led the market, though, with 9.8m in shipments. Even though its shipments shrunk 9.1% YoY, it still enjoyed a 38.6% market share in the quarter.

The Western European multifunction printer hard copy market fared less well, declining 6.3% (1.25m units) during 2019, the company added, mainly due to poor consumer inkjet sales. Inkjet shipments dropped 6.5% to 12.6m units, while laser shipments dropped 5.8% to 5.8m units during the year. These figures represent a long-term, irreversible decline due to a change in printing habits, said analysts.
The UK's hard copy market took a particularly large hit, with shipments down 18.1% in Q4 and 13.7% for the entire year.

According to IDC, large format printer shipments in EMEA grew by a healthy 14% in Q4 19, recovering from a soft third quarter. The strongest growth came from Western Europe, it said. Worldwide, HP is the biggest shipper with 31% of shipments (21% of revenues). Canon followed second with 22% of shipments (13% of revenues), while Epson came in third with 17% of shipments (8% of revenues).

Network Products

Expect Wi-Fi 6 penetration to accelerate thanks to the introduction of laptops supporting Intel's new Comet Lake 10th generation processors, which support the standard natively. It will reach over 10% in 2020, said sources. Sanao Networks' chair Tommy Tsai is already seeing Wi-Fi 5 orders slow, and expects Wi-Fi 6 access point prices to drop from between $290-$290 in 2H 2019 to $100 in June and July 2020.

 

Monthly Stats

New products broke into triple figures on six days during the month, hitting 323 (ten times its starting figure) on Feb 3, 107 on Feb 5, 213 on Feb 6, and then 278 on Feb 21 through 23. Stock up ranged between the high 2,000s and the mid-4,000s for most of the month, spiking up to a high of 6,301 on Feb 5. Stock down was more volatile, hitting two marked highs - 19,236 on Feb 3 and 19,727 on Feb 12, breaking out from its window between 13,000 and the mid-14,000s for most of the rest of the month. Its lows were a dip to 11,922 on Feb 4, and 7,736 on Feb 28.

Price increases hit four noticeable highs - 33,386 on Feb 5, 35,662 on Feb 10, 41,161 on Feb 21, and 39,684 on Feb 24. Extreme Networks products had the highest number of price increases during the month. Price decreases began up at 42,040 on Feb 3, only topping this with a 45,469 high on Feb 25. In between, they saw a moderate high of 32,066 on Feb 17, punctuated on either side by lows of 7,690 and 4,351 on Feb 5 and Feb 21 respectively. HP had the highest number of price reductions by manufacturer.

New Products February 2020

Prices and Stock Movements February 2020