Posts

Top 3 Predictions for Devices in 2022

Devices demand to decelerate in 2022

Devices market will see growth return to pre-pandemic levels throughout 2022

Many thought the initial surge in devices demand would quickly fade after the start of the COVID-19 pandemic, but that has not been the case. Revenue growth across the ecosystem, especially in PCs and tablets, has been much higher in recent quarters than traditional single-digit growth. However, this current elevation is unsustainable.

Over the past two years, the devices market has seen a major industry shift in supply and demand that has reshaped the ecosystem and has led to strong and consistent growth from most device vendors. It began with factory closures that hurt early 2020 supply chains and revenue growth, followed by a major spike in demand for devices used to entertain, work and learn from home during the pandemic. A shortage of components has led to this demand being unmet as of the end of 2021, leaving TBR to question whether vendors will be able to maintain revenue growth, unit sales and average unit revenues in the long term.

TBR expects a drop in demand and revenue growth by the end of 2022 due to these unsustainable conditions; however, other factors will emerge to help stabilize the devices market at pre-pandemic levels. These trends include continued revenue growth, albeit at a decelerated, low-single-digit pace rather than the 20%-plus year-to-year growth seen since mid-2020, as well as vendors’ releases of Windows 11 PCs and additional 5G device enhancements to drive refreshes in the coming year.

2022 devices predictions

  • PC market growth unsustainable, will return to single digits in 2022
  • Tablet market revenue growth set to decelerate in 2022
  • DaaS will lead all PC services in revenue growth through 2022

Learn more in our webinar 2022 Predictions: Devices

Send me a free copy of TBR’s Top 3 Predictions for Devices in 2022

Telecom Business Research’s 2022 Predictions is a special series examining market trends and business changes in key markets. Covered segments include cloud, telecom, devices, data center, and services & digital.

Hardware as a Service: 4Q21 insights from TBR’s Data Center team

Sometimes referred to as DaaS (Device as a Service), XaaS (Anything as a Service) or consumption-based models, hardware subscription offerings have become abundant in the market as vendors compete to build lasting customer relationships.

Join Principal Analyst & Practice Manager Angela Lambert and Senior Analyst Eric Costa Wednesday, Nov. 10, 2021, for a discussion on trends emerging among hardware subscription services.

Don’t miss:

  • Key developments and new offerings entering the market
  • TBR’s forecasted market growth
  • Differences in the market dynamics for PC subscription offerings versus data center offerings
  • Drivers and inhibitors that we expect to impact market expansion

Register today to reserve your space

TBR webinars are held typically on Wednesdays at 1 p.m. ET and include a 15-minute Q&A session following the main presentation. Previous webinars can be viewed anytime on TBR’s Webinar Portal.

For additional information or to arrange a briefing with our analysts, please contact TBR at [email protected]i.com.

WEBINAR FAQS

PC status report: PCs reach a turning point

Join Ezra Gottheil and Eric Costa for a presentation on the PC market’s “interesting year” of 2020, where demand skyrocketed as more people used more PCs for more purposes than ever before. TBR believes the pandemic positively disrupted the PC market, giving the total available market a boost that will endure past the end of the crisis. However, the market will be largely saturated going into a year of recession.

Don’t miss:

  • How PC use and the perception of PCs have changed, and what the long-term implications are for vendors
  • How the changes are affecting Device as a Service (DaaS), PC management, and the relationship between users and vendors
  • How the major vendors are responding to a disrupted PC market

1Q18 device revenue results were boosted by market shifts and increasing ASPs in PCs and smartphones compared to a weaker 1Q17

HAMPTON, N.H. (July 13, 2018) — Technology Business Research, Inc.’s (TBR) 1Q18 Devices and Platforms Benchmark finds that there is ongoing revenue opportunity in both the PC and smartphone markets. Total benchmarked revenue increased 15.9% year-to-year to $112 billion despite indications of saturation in the high end of the PC market.

Total PC benchmarked revenue increased 12% year-to-year to $32 billion. Total PC benchmarked gross profit increased 10.4% year-to-year to $5 billion despite increasing component costs. “Despite speculation that the PC market is dead, major device OEMs have been able to successfully navigate the shifting market and generate healthy profits,” said TBR Analyst Dan Callahan. “Renewed appetite for premium PCs in enterprise — and PC OEMs shifting their go-to-market strategies to respond — has been the primary driver.”

Total benchmarked smartphone revenue increased 11% year-to-year to $72 billion. Total smartphone benchmarked gross profit increased 14.8% year-to-year to $23 billion. Smartphone OEMs are combating worldwide saturation by increasing average selling prices (ASPs). Apple’s gamble with a $1,000 smartphone paid off, as customers responded with demand, and Android peers are following suit.

Device as Service (DaaS), an expansion of the former PC as a Service market, is transforming into an offering aimed at supplanting traditional PC financing. The benchmark explores how HP Inc. was the first of the big three PC OEMs to capitalize on the emerging opportunity and has been the first with concrete outbound messaging to partners and customers. This has afforded the company a lead, but it is not cemented. Dell Technologies and Lenovo will use the path HP Inc. paved to introduce DaaS to the market and quickly solidify their own unique solutions. Lenovo and HP Inc. see opportunity beyond the PC in PC as a Service, thus the introduction of DaaS.

The DaaS opportunity remains mostly untapped. Customers and partners are still trying to understand how this service differs from traditional financing and are still kicking the tires on the analytics often attached by OEMs as the main selling point of DaaS.

TBR’s Devices and Platforms Benchmark provides insight on interrelated ecosystems, including device vendors, platform providers, supplier relations, and technology partners across the consumer and commercial spaces. TBR’s vendor-centric analysis speaks to industry trends, while market sizing illustrates opportunity. Our Devices and Platforms research includes PC, tablet and smartphone vendors; platform providers; and technology partners.

For additional information about this research or to arrange a one-on-one analyst briefing, please contact Dan Demers at +1 603.929.1166 or [email protected].

 

 

ABOUT TBR

Technology Business Research, Inc. is a leading independent technology market research and consulting firm specializing in the business and financial analyses of hardware, software, professional services, and telecom vendors and operators. Serving a global clientele, TBR provides timely and actionable market research and business intelligence in a format that is uniquely tailored to clients’ needs. Our analysts are available to address client-specific issues further or information needs on an inquiry or proprietary consulting basis.

TBR has been empowering corporate decision makers since 1996. For more information please visit www.tbri.com.

Is the IT hardware market ready for Hardware as a Service?

Hardware as a Service — or maybe you call it PCaaS, DaaS or XaaS — is basically referring to bundling some type of hardware (e.g., phones, PCs, servers) with life cycle services and charging a recurring fee over a multiyear contract. The customer never really owns the hardware, and the vendor takes it back at the end of the agreement.

Sure, it’s not a new concept. But the solution hasn’t exactly taken off like a rocket ship, either. So, is it going to? Maybe. Its initial speed may be more like a Vespa than a SpaceX Falcon, but there are a few things working in its favor.

Why do buyers want it?

  • Retiring hardware is a huge pain. I have talked to IT leaders who have literally acquired warehouse space solely to store old hardware they have no idea what to do with.
  • Making it easier to stay up to date with tech. Management can no longer deny the negative impact on morale brought by an unattractive, slow and/or unreliable device.
  • Automation & Internet of Things (IoT) usher in new capabilities. Who doesn’t want to make managing hardware easier? Hardware as a Service is basically IoT for your IT department. Device management features like tracking device location and health are key functions of many IoT deployments and is a core selling point of Hardware as a Service offerings.

Why do vendors want to sell it?

  • Business models are changing. That darn cloud computing had to come along and change expense models, not to mention make it easier to switch between vendors. From Spotify and Netflix to Amazon Web Services and Salesforce, “as a Service” is second nature to IT buyers in both their personal and professional lives.
  • Creating stickiness. Hardware is more often perceived as “dumb” with the software providing the real value. If you’re a hardware maker (or a VAR), you need to make the buyer see your relationship as one that’s valuable and service-oriented versus transactional.
  • Vendors desire simplicity. Most vendors will tell you they have been building similar enterprise service agreements on a one-off basis for years. These new programs will hopefully create swim lanes to make it faster and easier for partners to build solutions.

Buyers are used to monthly SaaS pricing models, but that’s not really what creates the main appeal for Hardware as a Service. Buyers really want the value-added services and fewer managerial headaches.

So, how’s it going?

As someone who manages several research streams, I get to peek at results from a lot of different studies. Here are a few snippets of things I’ve heard and seen in the last month or so.

  • Personal devices: It certainly seems like there’s the most buzz around PCs, with Dell, HP Inc. and Lenovo all promoting DaaS offerings. I have also heard from enterprises doing initial DaaS pilots with as many as 5,000 PCs, but we seem to still be in very early stages of adoption. Both PC vendors and their channel partners are beginning to report “legit” pipeline opportunities tied to DaaS.
  • Servers: Either outright purchasing or leasing servers is still the overwhelming choice of purchase method for about 90% of IT buyers recently surveyed by TBR. Perceptions that an “as a Service” model will be more expensive in the long run is the main customer concern to date that vendors will need to address via emphasizing the value-added life cycle services.
  • Hyperconverged infrastructure (HCI): A bundle of hardware and a services bundle? This is the bundle of bundles! Not too many HCI vendors are openly promoting an “as a Service” pricing model at this point, but 80% of current HCI buyers in TBR’s most recent Hyperconverged Platforms Customer Research indicated they are interested in a consumption-based purchasing model, particularly to enhance their scalability. About 84% of those surveyed are using HCI for a private or hybrid cloud buildout, so maybe a more cloud-like pricing model make sense. Make no mistake, interest is not synonymous with intent, but it’s safe to say these buyers are at least paying attention to their purchasing options.

My general verdict is that things are still moving at Vespa speed. PCs have a head start over data center hardware based on the concerted go-to-market efforts of the big three OEMs and a consumption model that more closely aligns with the consumer services we’re used to. The second half of this year will be an interesting proving ground to see if the reported pipeline growth is converted to actual customers. Depending on how that goes, maybe we’ll see the data center guys making more serious moves in this space.

What do you think? Add a comment or drop me an email at [email protected].