Those operating in the hardware market are getting used to the idea that things will get better at some point in the future.
There’s the Windows 11 refresh effect to get excited about, along with the general refresh of ageing hardware that was purchased during the pandemic.
But in the meantime, the market remains a challenging one, particularly for those in the mobile market. Analysis of the second quarter from Context, which tracks business through European distributors, indicates that the market has remained on a downward trajectory.
There are two possible scenarios for how the quarter will have gone, with the most optimistic expecting a 23.3% year-on-year decline in the market. Those who tend to view the glass as empty are braced for a 32.5% decline. That would come on the back of a 21.6% drop in units sold in the first quarter.
“The two possible scenarios largely reflect our low expectations for the economy as a whole this quarter, but the more positive outlook assumes greater sell-out of excess stock,” said Adam Simon, global managing director at Context. “It also takes into account stimulation programmes designed to remedy the supply problems we saw in mid-2022, and assumes these will be successful.
“High inflation will continue to impact business spending in Q2, especially that of SMEs, which have to manage their cash flow more carefully. Most organisations will delay purchases, and where there is spending, it is unlikely to be on devices. Increases in the cost of living will continue to affect consumers, and there is a certain amount of saturation in this market due to purchases made during the pandemic,” he added.
The sense of a better outlook is one where an optimistic view is when the year-on-year declines are reduced in the third quarter and then mobile computing sales will grow by 5.8% and an even higher level in the first quarter of 2024.
The industry is suffering slightly from comparisons with a pandemic period where hardware sales were inflated as a result of the scramble by users to get the devices needed to work from home.
Although unit sales have declined in 2023 so far, revenues are holding up because average sale prices have also been increasing during the period. The channel is also benefiting from demand shifting to higher-value products.
“Activities designed to drive out low-end stock will be more than offset by higher demand and prices for mid-range and high-end products – something that has been happening since the start of the pandemic, added Simon. “So, although the current picture is rather gloomy, there are reasons to be optimistic.”
Earlier this year, Context voiced expectations that a similar improvement in market conditions would happen for the desktop PC segment, highlighting the role that Windows 11 could play in driving fresh investments.