NPD Group: 10 Fastest (And Slowest) Growing Technologies Or Brands In The Channel
Who's Up, Who's Down
Citing tracking data from its Distributor and Reseller Tracking Services, an NPD Group study found that revenue through the channel overall increased more than 5 percent in 2014. That level of growth, in the face of a changing technology and vendor landscape, means the channel is stronger than ever, Stephen Baker, vice president of industry analysis at NPD, said. However, there were some winners and some losers when it came to technology and brands in the channel, as some areas saw triple-digit growth and others were down for the year.
Take a look.
While mobility isn't yet officially tracked by NPD data, Baker said it is a growing and "underdeveloped opportunity" in the channel. The challenge with measuring the success of mobility in the channel, Baker said, is that so much of the market is centered around BYOD. However, that doesn't mean there isn't a market for mobility sales in the channel, he said, as the technology opens up opportunities for containerization, security, mobile management and more.
"I think it's pretty underdeveloped right now, but that's clearly an area of opportunity going forward," Baker said.
The area with the largest drop in sales in 2014 was printer consumables, which dropped 4 percent. The reason behind that is simple, Baker said -- businesses are just printing less overall. That trend is continuing, he said, as more people choose to view and save documents in the cloud and on their devices. However, that doesn't mean the opportunity around print is completely over, Baker said, as NPD sees managed print services as an area of opportunity.
One surprising drop for the channel was in sales of software, NPD's report found. Sales of software for 2014 fell by 3 percent. Baker attributed the drop to slower OS sales in 2014 compared with 2013 as well as an overall reluctance by businesses to upgrade to Windows 8. Another factor in lower growth numbers for software is a general tendency for it to be more of a direct business than through the channel, he said. Kyle Cebull, CMO of Fort Myers, Fla.-based Entech, said dropping software sales could also be due the rise of Software-as-a-Service, which delivers less revenue up front compared with traditional software sales.
Desktops hit a second year of strong growth, the NPD study found, with 6 percent growth in 2014 and 9 percent growth the year before. Baker said desktop PCs remain a strong "core product" to a company's business and, like everything, eventually wear out. That PC refresh rate has continued the strong growth numbers for desktop PCs, he said, and represent a large, continuous opportunity for the channel.
Networking hardware sales grew for the second year in a row, climbing 6 percent in 2014. The NPD study credited its growth to strength in security appliances. Baker added that back-end systems, including storage and infrastructure, are a "consistent" area of growth for businesses of all sizes. Especially with the rising popularity of the cloud, Baker said that there is a lot of demand for the channel to build infrastructure solutions.
"There's just a lot of activity there," Baker said.
While it's not a particular technology, certain brands saw strong sales growth in the channel. The top three brands for the channel included Hewlett-Packard, Cisco Systems and Lenovo, NPD said, with 7 percent growth to more than $23.5 billion in sales through the channel. Other major brands include Dell and Intel, which each saw their sales surpass $1 billion in the channel, a jump of 25 percent.
The PC isn't dead, NPD found, with 14 percent growth overall in 2014 for the category. While some individual categories were growing faster than others, such as Chromebooks, the market overall is healthy and growing, Baker said. While the consumer market has a little more "craziness," Baker said the business market for PCs remains strong and steady as it remains an important tool in the workplace.
"It remains a core product and a core business tool for everyone who has a job," Baker said.
As memory and processor sales strengthened, component sales in the channel saw strong 15 percent growth. Baker attributed that growth to end users looking to make the most out of their technology, and recognizing that strong back-end systems and strong processors are one way to do that.
One of the areas that saw the biggest sales growth was built-to-order PCs, NPD found. As end users looked to find alternatives to Windows 8, NPD said it saw alternatives to standard PCs jump 28 percent, a total of 2.7 million desktops and notebooks. Baker said he also saw end users looking to build more customized products that were configured to optimize a specific task.
"Trying to make sure you have the right kind of products means you want to go out and buy some kind of specialized device to solve a specialized problem," Baker said.
Chromebooks won the prize for most growth, NPD said, with unit volume increasing 125 percent in 2014. The focus of most of those sales was the education market, NPD said, with close to half of all of the sales happening in the back-to-school period between June and August. Baker said 2014 saw an increase in the number of vendors offering Chromebooks, with big vendors such as Dell, Lenovo and HP joining early entrants Samsung and Acer. While the opportunity for Chromebooks seems to lie mostly in education, Baker said it will be interesting to see what opportunities emerge down the road for Chromebook as a business tool.