Market remains challenging for distribution

At the halfway stage of 2025, distributors across Western Europe are standing firm in the face of continued economic uncertainty. Many had hoped that the prospects would improve after a challenging past year, but continuing wars and tariffs have added to the reasons why customers are hesitant to pull the trigger on IT spending.

Even in those conditions, the picture is one of resiliency. According to Context’s SalesWatch distribution report and insights from the Global Technology Distribution Council (GTDC), there have been strong software and desktop sales, offset by a slowdown in networking,

Regarding growth, there has been a continued appetite from customers for virtualisation and security software. On the hardware side, the move away from Windows 10 is driving upgrades, and gaming demands are driving sales of graphic cards and processors.

Year on year (YoY), there was a sharp decline in networking, with sales of datacentre security products being an area of particular concern.

“The market is showing remarkable resilience in a complex macro environment,” said Anthony Frot, research director at Context. “Ongoing geopolitical pressures, particularly related to US-EU tariffs and currency shifts, are clearly creating volatility. However, across Europe, the sustained growth in software and AI-aligned hardware categories points to a broader modernisation trend in enterprise IT.”

Context’s analysis of Q2 indicated that distributors were feeling the impact of a weakening US dollar. The threat of tariffs, which have again hit the headlines this week, have contributed to short-term shifts in pricing and product availability.

Looking at the progress in Q2, the UK – along with Germany, Italy and Spain – posted weaker-than-expected figures for week 19 of Q2. France remained steady, but the performance of Poland and the Nordics was one of the highlights, with those countries performing above both 2023 and 2024 levels.

As the deadline for end-of-life support for Windows 10 nears in October, the expectation is that hardware spending will continue into the second half of the year. Context is expecting strong growth in desktops, fuelled by the increased interest in AI-capable machines, to be a feature of the distribution channel for the rest of this year, along with moderate growth in mobile sales.

Full-year forecasts point to an 11.8% YoY increase in desktop unit sales, and an 11.7% rise in revenues. Mobile PCs, including notebooks and tablets, are set to grow by 6.2% in units and 8% in revenues.

Those hoping that growth will mean a change to the narrative in the second half might be disappointed, with the networking product and services sales also expected to remain under stress.

“Overall revenue expansion may be tempered by sluggish enterprise networking performance, forecast to grow just 0.6%, and by a difficult year-on-year comparison in Q2 for tablets,” said Frot. “On a more positive note, investments in AI infrastructure are driving upgrades in datacentre networking, offering a bright spot in the broader enterprise IT landscape.”