Initially, there were brief signs of a recovery in the UK’s outsourcing market, but it was not enough for declines to continue in 2018.
US-based Enterprise AI software maker, Dataiku, has just announced the company has raised £80 million in a Series-C round – one of the largest funding rounds for AI ever – and the company will aggressively speed up their expansion into the UK regardless of Brexit.
Desperate to prove that Theresa May’s Brexit deal is not the lame duck that the pundits claim, DCMS Secretary of State Jeremy Wright has claimed it will “provide the UK’s booming £130 billion digital sector with the certainty it needs to continue to thrive”.
Writing in her bog, Microsoft’s UK managing director Cindy Rose said the deal was in Vole’s interest because it allowed the “free flow” of data in and out of the UK.
“Many of our customers and partners operate businesses that rely on Microsoft’s cloud computing services. These businesses require the frictionless flow of data across borders in order to operate effectively. We have consistently advocated to the government the need to ensure this data flow continues post-Brexit.”
Lovelock explained that although Brexit will have a “dampening effect” on spend in EMEA, full spending on IT will resume 12 months after Brexit.
He warned that a range of scenarios could upend their forecast, such as a no-deal or hard Brexit.
The spending that has come out of the market in 2017 and 2018 is from businesses reacting to the uncertainty of what the deal will be. While businesses are uncertain as to what is happening, they can’t plan and tend to stick their hand back in their pocket and wait until they have more certainty on what the rules will be and how they will be able to engage with them, he said.
His advice was not to necessarily look at our forecast, which is the ‘most likely’ scenario.
“There is a rising chance of a recession in 2019 or 2020 – it’s not so large that it is in our ‘most likely’ scenario – but it is possible and they ought to have a plan should a recession occur.”
Overall IT spending in EMEA is expected to hit £742 billion in 2019, representing a two percent increase from 2018’s estimated total of $954 billion. The UK is predicted to see $204 billion spend next year – a 1.9 percent decrease on 2018’s figure.
Brexit is tiggering IT spending across EMEA, causing it to be the third-slowest-growing region for IT spend in 2019, after Eurasia and Latin America.
Lovelock says this is due to a number of factors, including Brexit, but price problems with mobile phones causing supply and demand to plateau.
Gartner predicts enterprise software will continue to be the area seeing the most expenditure, predicting a growth of 7.3 per cent – a slowdown from the 12.7 percent rate it grew at in 2018.
Enterprise application software can grow at such a strong rate is because it starts to take money from other areas as it goes into the cloud, he said.
“For example, if I am buying licensing software from a vendor, I need to also buy a server and storage, networking and backup equipment. If I buy cloud software, I don’t have any extra charges, so I can take money out of my server and storage spending and put it into cloud software.”
Burns described a frightened mouse as a”Wee, sleekit, cowrin, tim’rous beastie; O, what a pannic’s in thy breastie!”
In short, the channel mice are terrified of what might happen in the case of a hard Brexit.
Translated from the Scots dialect, the poem also suggests the channel hasn’t a clue and needs leadership. Maybe the future is too horrific for it to face the plain and simple truth. The channel may suffering what’s called in posh words “cognitive dissonance” but, in a short Anglo-Saxon phrase, cacking its pants.
We put this to Steve Brazier, the lead analyst at Canalys this morning. And he’s far more outspoken than his customers and clients.
He said that if there’s a hard Brexit from the European Union, the pound will crash, tech prices will rise and the UK will suffer a major recession.
The point is that while other manufacturers in say, the car industry, have spoken out loudly about the dangers to business, only one of the Big Six has said anything. We talked to Lenovo which said that it’s in favour of open trade and implied strongly that a soft Brexit or no Brexit at all was preferable to falling into the abyss.
The primary impact of a hard Brexit is the UK, but Ireland will be affected too, because the Irish tech channel is similar to the UK, said Brazier.
Specifically, distributors and vendors will be affected and because no one knows what the outcome will be – that’s anyone, right from timid resellers and vendors right up to Her Majesty’s Government, and perhaps even the devil. However, she or he probably has all the detail.
A bevy of senior Dell EMC executives spoke to a bevy of tech hacks this morning and spelled out in detail their promise of reseller goodnesses for their mega storage and server businesses.
Speaking at the Canalys Channel Forum in sunny Barcelona, the company was quick to say it was prepared for the British exit from the EU (Brexit) from day one, and even before day one. It is talking to the UK government and to other bodies and organisations to ease the transition if and when and however it comes.
But, and relating to its channel strategy, Dell EMC said it had given its resellers a lower price, and “that forms a strong incentive to the channel. Large accounts worldwide are wide open. If our partners win that business they’re protected.”
Dell EMC said it will be a partner led strategy.
“Speaking to our partners and what they want from us is to look at the opportunities that exist in our enterprise business. We have to give them the ability to sell right across the range of Dell’s product portfolio.
“We’ve looked at where the opportunities are for the channel. We’re putting a commitment to the channel in order to invest and win incremental business, to be protected and we’ve introduced “partner of record” – that means the customer is locked to the partner for a period of a year. It’s exactly what our partners asked for.”
Dell EMC said there are two flavours of its preferred programme.
“It’s not just for enterprise customers but we’ve expanded this to include commercial as well. The benefit for the partner is really simple. When partners sell more, they make more margin and revenue and it gives incremental opportunities. This is very much based around our storage portfolio.”
Further, Dell EMC is pushing into its enterprise IoT business for large organisations and will offer eight bundles aimed at specific environments.”
It’s the software that is the secret, the company claimed, and the bundles are related to large requirements such as energy requirements for connected organisations.
“It is not going to pay all the bills this year, next year or even the year after. These are early attempts to figure out how to promote this technology. We have IoT training for customers and partners and have made this available through our distributors.”
Around a half of its enterprise storage and server offerings are fulfilled through the channel, the company claimed.
Banking, financial services, healthcare and life sciences are likely to suffer some adverse impact from Brexit as no one knows what software they are going to need.
This means that the majority of companies in the UK have not yet begun preparing for Brexit, and there are growing fears of supply-chain disruptions. As for providers, the large ones should be able to cover most situations that arise, but smaller UK-based providers may struggle with the changing market dynamics.
Many vendors hope that there will be a spike in demand after 29 March next year as customers try to get in-line with any changes quickly.
Banks had already started to move headcount out of the UK, and there was talk of some movement in the car manufacturing areas, and that would be a strain on existing systems based on the current situation, the report said.
There were also signs that aside from Brexit customers were looking for more focus on next-generation options from their application development management partners. Areas of interest included: analytics, IoT, cloud-native architecture, SaaS-based offerings, security, customer experience and mobile.
The WiFi4EU funding programme, which is designed to give local authorities the chance to access EU financing to build free public wireless internet hotspots, is still around and value-added distributor Nuvias and networking outfit Nokia are ready to help town and city councils move quickly to install and deploy Wi-Fi in the early stages of this programme.
Local authorities can register on the WiFi4EU portal and apply for the grant or voucher. Applicants will be selected on a first-come, first-serve basis, so time is of the essence. Nuvias and Nokia together have the solutions and expertise they reckon to move quickly and help councils get community Wi-Fi systems up and running.
NuviasTechnologies & Solutions Development Director Rob Clark said that despite uncertainty over BREXIT, the UK is still eligible to participate, but time is running out.
“Connectivity stakes are high in today’s digital age, so UK councils are strongly encouraged to participate by registering today”, recommends. As of 25th April 2018, some 74 UK municipalities had already registered”, he said.
“Citizens today expect local authorities to provide Wi-Fi access in public areas such as shopping centres, stadiums, event venues, airports, train stations and bus stops. In fact, nearly 43 percent of Britons are frustrated by the lack of free, public wi-fi networks available, according to YouGov research detailed in the Digital High Street 2020 Report. Additionally, studies have shown that cities investing in public Wi-Fi gain substantial benefits. More than half of respondents to a European Cities Monitor survey stated that “quality of telecommunications” was a key factor in attracting people and business to cities, and investment in this area is likely to generate rewards”, he added.
Two EU agencies – the European Medicines Agency (EMA) and the European Banking Authority (EBA) – announced intentions to move their headquarters out of Canary Wharf, London, last month, picking Paris and Amsterdam respectively as their new homes.
The move will see more than 1,000 jobs leave the UK – 900 from the EMA and 150 from the EBA.
This has put the kybosh on Uni-Systems’ plans to expand into the UK and Paris to better support its largest customers.
But since the EMA is trading London for Amsterdam, plans for a London office have been abandoned.
This means that Uni will set up in Paris first, probably in 2018.
The EMA has set March 2019 as the deadline for its relocation to Amsterdam. The Dutch capital was selected out of 19 bids to house the EU agency.
Athens-based Uni-Systems has made a significant push to grow its international sales as the Greek banking sector began to shrivel up as a result of the 2007 to 2008 financial crisis. Loumakis said that hefty long-term contracts with the European Union are vital to boosting overseas business.
R3 says as data shows prolonged fall in corporate insolvencies seen between 2010 and 2016 appears to now be in reverse.
According to Q3 stats from the Insolvency Service, underlying corporate insolvencies rose 15 per cent between Q2 and Q3, and are also 15 percent higher than this time last year.
Although corporate insolvency data has bounced around in recent quarters, the Q3 stats – which cover England and Wales – are in line with an underlying rise in bankruptcies since the middle of 2016.
R3 said businesses are coming under more strain from rising costs, partly due to factors relating to last June’s referendum.
In a statement, R3 president Adrian Hyde warned that businesses have faced a number of fresh challenges over the last year. Increasing input costs caused by post-referendum inflation increases and a weaker pound, a rising national living wage, the added costs of pensions auto-enrolment, and, for some businesses, rising business rates will have hurt bottom lines.
“Some of these added costs will have been passed on to customers, but reliance on consumer confidence isn’t necessarily a recipe for long-term financial health. Consumers’ ability to absorb price rises is limited, and with spending fuelled by consumer debt, potentially unsustainable. An interest rate rise is just around the corner, too. Although it may be a small one, it may be too big for those businesses and their customers already on the edge.”
Hyde added that R3’s own statistics show the number of businesses with signs of growth have fallen from recent record highs, while the number of businesses with signs of distress are increasing from recent record lows.
Britain might be great again and have full employment, rule the waves etc since it stood up to Brussels, but Brexit has caused a spike in the price of various goods, ranging from computers to coffee and wine, with the channel having to pass on the bad news to customers.
According to Which? magazine, the consumer watchdog asks questions about the impact of Brexit and details the range of price increases that have hit customers.
Apple MacBooks, which in some cases have increased by just shy of 20 percent, along with Microsoft Surface models that have gone up between 11-15 percent. But those are not the only two vendors that have been forced to increase retail prices. Ever since the referendum result slightly more than a year ago there have been movements in the prices of goods because of the slump in sterling.
Which? tech expert Jack Turner reckoned that some vendors had been quicker than others to pass the price rises on but exchange rates had caused a huge impact across the sector.
Nearly all of the major hardware vendors have been forced to bow to currency pressure and put up prices. So far since the Brexit vote the likes of HP, Dell, Lenovo along with Apple and Microsoft have raised hardware prices between 10-15 percent and software prices by 20 percent.
Context, which monitors the ASPs being offered through distribution, has seen rises over the course of the last year, which have continued into Q3.
Distributor ASPs for PCs were up 17 percent year-on-year across Western Europe, from €486 in July and August 2016 to €567 in early Q3 this year.
Currency fluctuations have been driving PC ASP increases since Q3 2016 but Context has also noted a move towards more high end gaming systems in the consumer segment, which has had an influence on prices.
Still at least the lot of the common man is better since Brexit… oh
Whatever some politicians might talk about the benefits of leaving the EU, Whitman confirmed there had been a pause in demand in the UK market after the EU referendum.
“I think we are still feeling some after-effects from Brexit, because it’s not clear exactly how this is all going to work. So I would say, the UK market is a bit challenged for us”, she said.
Public sector spending also being cut back “quite dramatically” and the UK has suddenly become one of HPE’s weaker markets.
Once it was a very important market, but now the rest of Western Europe, the US, Canada, Latin America and Asia were “all outperforming the UK right now”.
It looks like as far as HPE is concerned the UK, rather than growing more important as it asserted its independence from the EU is becoming an also ran behind such wonderful economies as Brazil, Venezuela and Burma. Maybe they should have put that on the Brexit campaign bus.
It has said that the Government’s post-Brexit IT system for customs is heading for a “horror show” that could risk £34 billion of public income.
In a scathing assessment, the National Audit Office said the computer system might not be ready by the time Britain leaves the EU, potentially plunging the UK’s ports into chaos.
The £157 million system is due to be completed just two months before Brexit in March 2019, but the NAO says delays common to new IT would cause massive disruption.
In unusually tough language, auditor general Sir Amyas Morse said ministers were only beginning to understand the momentous task of Brexit and that without further resources would find that “at the first tap, this falls apart like a chocolate orange”.
Publishing his report on the Customs Declaration Service, Sir Amyas said the IT system to record declarations on imports and exports threatened to become “a horror show”.
He said that the system is “well regarded”, but not considered flexible enough to cope with new rules after Brexit.
He went on: “At the moment it’s due to deliver just two months before the EU deadline … Our view in this report is that there is very little flexibility, should the programme overrun or unexpected problems occur. There are plenty of such problems that could occur.
“We’re not telling you this is a badly run project but, to be frank, looking at IT projects with still considerable technical challenges not yet resolved in them, we kind of know that it’s normal for there to be some drift in time.
“What’s unique about these circumstances is there can’t be a drift in timescale. Normally if you have this project and it took another six months to be a working project you’d say this is a pretty successful project. But this is not like that.”
Among risks outlined in the NAO’s report is the possibility that Britain’s final deal with the EU might require features in the IT system not yet anticipated by its designers – requiring last minute changes and causing more delays.
The Government wants to migrate from the old customs computer system starting in August 2018 and finish in January 2019. Under Article 50 the UK will leave the EU automatically just eight weeks later.
IDC has added up some numbers and divided by its shoe size to discover the EMEA PC market has continued to stabilise in the second quarter of 2017 with shipments only dropping 0.6 per cent year over year. However this did not apply to the UK which is more battered than a Mars bar in an Edinburgh chippie.
A total of 15.91 million units of desktops, notebooks and workstations were shipped in Q2, down from 16.01m in the same three months of 2016.
Brexit-related uncertainties meanwhile dragged PC shipments down by 11.8 percent in the UK, while German shipments also contracted, claims IDC.
Notebook shipments were the region’s star performer, growing 3.1 percent annually with a particularly strong 5.2 percent growth in central and eastern Europe (CEE).
Desktop shipments continued on a downward trajectory according to IDC, with shipments falling 8.3 percent year on year in EMEA. CEE again saw the highest year-on-year shipment increase at 7.8 percent.
Western Europe was however subject to soft declines of 2.1 percent annually having previously posted two quarters of growth. Desktop shipments fell by 7.8 per cent annually while notebook sales grew marginally, according to IDC.
The PC market in France, Spain and Portugal all performed above the market watcher’s expectations, seeing year-on-year growth of 1.9 percent, 11.6 percent and 16.7 percent respectively. Benelux also enjoyed a 5.8 percent annual increase in shipments.
“The traditional EMEA PC market continued to stabilize for another quarter, thanks to strong notebook results stemming from a faster adoption of mobility, in both the consumer and commercial spaces.
Malini Paul, senior research analyst of western European personal computing devices at IDC said: “The return of the CEE region to positive growth for two consecutive quarters, contributed significantly to the overall better than expected results in the EMEA market.”
According to IDC, the CEE region’s strong performance in PC shipments is thanks to a thriving retail market and some large public sector deals in the region.
“In the CEE region, the PC market reported high growth in the desktop space, resulting in an increase of 7.6 percent after more than nine long quarters of market decline. This success can be attributed to promotions in retail, continual growth of gaming, and a few large deals that took place the public and corporate segments,” said Nikolina Jurisic, product manager at IDC.
IDC also claims that the consolidation among the top five PC vendors in EMEA is progressing, with HP growing its market share by one percent year over year, driven by solid notebook results and a desktop growth in the consumer space.
Lenovo also improved market share by 1.1 percent, and saw double-digit growth in commercial notebook shipments. Dell also saw marginal increases in market share for the quarter.