By Jason Kimrey
Welcome to the summer 2022 edition of my Partner Market Insights!
We’re seeing some areas of the business heating up while others show signs of cooling.
PC shipment decline: Worldwide shipments of PCs are expected to decline by 9.5% this year. Gartner is attributing the decline to inflation, geopolitical unrest and supply-chain disruptions. Business PC shipments are expected to drop less than consumer PCs.
IDC is also projecting PC shipments will be down, but by 8% year-over-year, to about 321 million units. Tablet unit shipments are expected to drop roughly 6%. Despite the declines, IDC notes that shipments will remain above pre-pandemic levels and should return to positive annual growth levels next year.
IDC also reported that demand for PCs declined 15% in the second quarter. Despite the recent decline and weakening demand, total PC volume is still comparable to that at the beginning of the pandemic.
In the cloud: According to Forrester, nearly all (94%) U.S. companies are using at least 1 type of cloud deployment, and the majority are using hybrid or many cloud environments. Nearly three quarters (74%) are adopting containers within a platform as a service model.
Compute & storage infrastructure spending rises: Spending on compute and storage infrastructure products for cloud deployments, including dedicated and shared environments, increased 17% year-over-year in the first quarter, to $18.3 billion, according to IDC. Investments in non-cloud infrastructure increased nearly 10% year-over-year in Q1, rising to $14.8 billion.
Infrastructure as a Service grows: The infrastructure as a service (IaaS) market grew 41% in 2021, for a total of $90.9 billion worldwide. That was up from $64.3 billion in the previous year, according to Gartner.
Software sales surge: Software sales in the first quarter recorded a 14% increase, IDC says. March was the largest single month for software sales in the last 4 years.
IT spending trends: TechCrunch expects overall IT spending to increase nearly 7% this year. The energy sector is forecast to show the highest budget increases by sector.
Government IT spending: Worldwide, governments are expected to spend $565.7 billion on IT this year, up 5% over 2021. One interesting note in this report is the growing popularity of Anything-as-a-Service (XaaS) across government organizations for its better ROI and the fact that it helps governments avoid the accrual of more technical debt. By 2026, Gartner predicts, most government agencies’ new IT investments will be made in XaaS solutions.
AI and business-process automation: Half of current finance artificial intelligence (AI) deployments will be either delayed or cancelled by 2024, Gartner expects. Meanwhile, the use of business-process outsourcing (BPO) for AI will rise from 6% to 40% in just 2 years.
Sustainability service spending: Environmental, social and governance (ESG) business services spending will grow to $158 billion by 2025, enjoying a 5-year compound annual growth rate (CAGR) of 32% as companies look to improve sustainability, predicts IDC.
Spotlight on Inflation
You can’t get away from news about the impact of inflation, and our industry is no exception.
CFOs are expected to look at cost-reduction strategies if high inflation continues, Gartner says. In addition, automation is seen as an important strategy to help CIOs combat higher costs.
IDC expects 18 to 24 more months of elevated rates of IT inflation of 7% to 8% across all IT categories. That should be followed by a moderation to slightly below-average rates in the following 2 to 3 years.
CIO adviser Marc Dowd shared some good thoughts in this post:
“If you have laid the foundation by becoming a partner in the growth and success of the organization and have led the charge as IT becomes integral to the delivery of goods and services to customers, chances are the budget will get approved, and the impact of IT inflation on your organization can be absorbed and offset by the increased value you are providing to customers.”
Sales, Marketing and E-commerce Trends:
Business-to-business (B2B) ecommerce sales are expected to exceed $2 trillion by 2023 and grow at a 5-year CAGR of nearly 11%, predicts Forrester. Last year, B2B ecommerce sales in the United States saw record-breaking growth. Looking ahead, Forrester expects ecommerce will account for nearly a quarter of total U.S. B2B sales by 2027.
More than 8 in 10 B2B buyers (83%) prefer ordering or paying through digital commerce, says Craig Riley, chief of research in the Gartner Sales practice. A new approach is needed, he says, one that combines digital and human engagements to help buyers feel more confident in their decisions and drives high-quality deals. Gartner’s B2B buyer survey found that close to three-quarters of B2B buyers (72%) completed a recent significant purchase transaction by ordering or paying online.
Marketing budgets are on the rise. They’ve increased to 9.5% of company revenue this year, up from 6.4% last year, notes Gartner.
Data matters: We’ve talked about how important data is to business. Well, Gartner reports that 65% of organizations are transitioning to data-driven decision-making.
To wrap up this summer edition of Partner Market Insights, I wanted to share 2 final articles about our ecosystem:
Jay McBain of market watchers Canalys shared this article from Nuzoo’s Christine Horton about how and why the channel is increasingly being replaced by IT ecosystem. As McBain explains, “An ecosystem is 10X larger in size than a channel at most companies.”
What do customers want from their partners? We often talk about trusted advisors. In an environment that’s so complex and changing rapidly, expertise and proactivity are key. The Channelist highlights what CIOs want—proactive partners.
The article includes a quote from Heather Hinton, CISO of cloud-based communications provider RingCentral:
“We have to make decisions much, much faster. I am really reliant on my channel partners to make sure that they’re giving me the right information. For vendors, that means being able to solve a problem, not merely selling what they have in stock.”
Jason Kimrey is vice president of U.S. channel and partner programs at Intel.