Context: Distribution will enjoy growth next year
Analyst shares its expectations of the amount of IT spending that will go through European distributors in 2024
The channel can mark its diaries, with the second quarter next year set to see the start of a turnaround in market fortunes.
This year has been tough, with a combination of economic pressures, exacerbated by wars, leading to a dampening of spending and high levels of belt-tightening across the customer base.
But there are increasing signs that next year is going to be more positive, and Q2 is when it should start to be much more apparent.
Context, which tracks the performance of IT distribution across Europe, is forecasting growth of 2.6% year-on-year in 2024. According to the analyst, there are several factors that are driving the prospects for a better period ahead, including delayed product refresh cycles kicking in, plus the impact of generative AI.
Artificial intelligence should continue to drive more revenues as a greater number of use cases for the technology emerge over the coming months.
The industry will also be comparing a fresh year with 2023, when it’s going to be possible to generate improved comparisons with growth.
“2023 has been a year of correction after the Covid-fuelled growth of recent years,” said Context global managing director Adam Simon. “It has been a tough year for distribution and all the IT Industry as businesses suffered a loss of confidence to invest. However, there is light at the end of the tunnel. Q2 2024 will be the turnaround quarter. We predict volume and value growth rates converging, and then continuing in the second half of the year, helped by positive YoY comparisons.”
Customer confidence
Like all predictions about 2024, they come with caveats around the possibility that macroeconomic conditions will not improve as quickly, and there are always X factors that could have an impact on customer confidence.
But there is a consensus building, and a sense that across Europe, confidence is starting to rise around the prospects for next year.
Although 2023 has been a tough year, numbers from the major distributors – particularly those such as Westcon-Comstor and Exclusive Networks, which operate in security and cloud – have demonstrated a resilience across the channel in the face of tough conditions.
Where the growth is coming from based on product areas
According to Context, there are degrees of growth expected next year across a range of product segments:
- PCs: Mobile computing 4.9% to 11.7%; desktop computing -0.8% to 8%
- Enterprises servers: -0.4% to 7.6%
- Enterprise storage: -0.2% to 7.7%
- Displays: Desktop monitors -6.2% to 2.6%; large format display (LFD) 1.7% to 11.7%; networking -10.2% to 1.3%
- Imaging: Printer hardware -5.8% to 3.9%; consumables -3.3% to 0.6%
