IT distribution outfits expect to see decent growth as the year winds up, but there are signs that negative economic conditions will have an impact going into 2023.
Beancounters at Context have added up some numbers and divided them by their shoe size and concluded that the industry faces economic headwinds, including high inflation, exchange rate fluctuations and the cost of living crisis.
Context said that the channel is still feeling optimistic and expects there should be 3.7 percent year-on-year growth in 2022.
The numbers are better than had been expected when Context looked at prospects for this year back at the start of 2021, when it predicted 3.2 percent growth. The analyst firm is expecting a strong finish to the year, but has then talked of market conditions “softening” moving into 2023.
Apparently 2022 will go down as a solid year because of continuing demand from customers for infrastructure, software and services that has benefited servers, networking and storage segments.
Supply chain problems that have plagued the channel for the past couple of years have finally started to ease, and that helped those selling networking and servers.
In terms of specific product areas, starting with PCs, the expectation is that there will be plenty of caution, both among business customers and consumers, in the face of inflation. The absence of schemes such as government-backed education projects will also make life harder.
That same combination of caution and concern about the economic situation will hit the display market.
Enterprise infrastructure is performing strongly and Context expects datacentres to see the biggest distribution growth of any sector over the next few months. Security, software and services are all looking good as areas where distribution will perform well.
Storage and server sales, helped by a reduction in backlogs, will also motor during the rest of the fourth quarter and networking sales are also tipped to end the year well, particularly in the enterprise switching category.
Context global managing director Adam Simon said that hybrid working trends will continue to fuel demand for hardware, while growth will come from IT infrastructure, and government investment in health and education, supported by the NextGenerationEU Covid relief fund.
“On the flipside, consumer demand has softened thanks to the surging cost of living, economic uncertainty and the spectre of recession – and will continue to do so into 2023.”
