| KN30005 |
| KEY NOTE Market Report : Computer Hardware : April 2005 |
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| Executive Summary |
| 1. Market Definition |
| REPORT COVERAGE |
| MARKET SECTORS |
| Data Processing Equipment |
| Peripherals/Add-Ons |
| MARKET TRENDS |
| New Life in the IT Market |
| Buyers More Hard-Headed Than in the Past |
| New Computing Architectures |
| Utility Computing |
| Grid Computing |
| New Technologies |
| Processor Developments |
| Blade Forms/Brick Forms |
| SAN/NAS Network Technologies |
| Internet Protocol Storage |
| ECONOMIC TRENDS |
| Population |
| Table 1: UK Resident Population Estimates by Sex (000), Mid-Years 1999-2003 |
| Gross Domestic Product |
| Table 2: UK Gross Domestic Product at Current and Annual Prices (£m), 1999-2003 |
| Inflation |
| Table 3: UK Rate of Inflation (%), 1999-2003 |
| Unemployment |
| Table 4: Actual Number of Unemployed Persons in the UK (million), 1999-2003 |
| MARKET POSITION |
| The UK |
| Table 5: The Share of Expenditure on Computer Hardware, Software and Services Taken by Computer Hardware by Value (%), 2000-2004 |
| Overseas |
| Table 6: The UK's Share of the Global Computer Hardware Market by Value (%), 2000-2004 |
| 2. Market Size |
| THE TOTAL MARKET |
| Table 7: The Total UK Computer Hardware Market by Sector by Value (£m at end-user prices), 2000-2004 |
| BY MARKET SECTOR |
| Client Computers |
| Table 8: The UK Client Computers Sector by Value (£m at end-user prices and %), 2000-2004 |
| Market Shares |
| Table 9: Estimated Shares of the UK PC Market by Volume (%), 2004 |
| Servers |
| Table 10: The UK Servers Sector by Value (£m at end-user prices and %), 2000-2004 |
| Market Shares |
| Peripherals/Add-Ons |
| Table 11: The UK Peripherals/Add-Ons Sector by Value (£m at end-user prices and %), 2000-2004 |
| Printers and MFDs |
| Storage |
| Datacoms Hardware |
| Market Shares |
| OVERSEAS TRADE |
| Table 12: Principal Products and Trade of Computers and Other Data Processing Equipment (£m), 2000-2004 |
| Main Trade Partners |
| Table 13: The Main Trade Partners of Computer Hardware† (£m and %), Year Ending November 2004 |
| Imports |
| Table 14: The Main Sources of Computer Hardware† Imports by Value (£m and %), Year Ending November 2004 |
| Exports |
| Table 15: The Main Destinations of Computer Hardware† Exports by Value (£m and %), Year Ending November 2004 |
| 3. Industry Background |
| RECENT HISTORY |
| INDUSTRY SYNOPSIS |
| Table 16: Average Financial Performance of Companies Engaged in the Manufacture of Computers and Other Information Processing Equipment (£000, % and £), Latest Financial Accounts |
| NUMBER OF COMPANIES |
| Table 17: Number of UK VAT-Based Enterprises Engaged in the Manufacture of Computers and Other Information Processing Equipment by Turnover Sizeband (number and %), 2004 |
| EMPLOYMENT |
| Table 18: Number of UK VAT-Based Local Units Engaged in the Manufacture of Computers and Other Information Processing Equipment by Employment Sizeband (number and %), 2004 |
| Table 19: Number of Employees Engaged in the Manufacture of Office Machinery and Computers, June 2000-2004 |
| REGIONAL VARIATIONS IN THE MARKETPLACE |
| DISTRIBUTION |
| Characteristics of the Main Channel Operators |
| Table 20: The Main Channel Operators, 2005 |
| Table 21: The Main Channel Operators by Type of Product, 2005 |
| HOW ROBUST IS THE MARKET? |
| LEGISLATION |
| Waste Electrical and Electronic Equipment, and Restrictions of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment Directives |
| The Electromagnetic Compatibility Regulations |
| KEY TRADE ASSOCIATIONS |
| European Information, Communications and Consumer Electronics Technology Industry Association |
| Intellect |
| Personal Computer Association |
| 4. Competitor Analysis |
| THE MARKETPLACE |
| MARKET LEADERS |
| 3Com UK Holdings Ltd |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| Canon Europe Ltd |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| Cisco Systems Ltd |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| Dell Computers |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| EMC Computer Systems (UK) Ltd |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| Epson (UK) Ltd |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| Fujitsu Siemens Computers Ltd |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| Hewlett-Packard Ltd |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| IBM United Kingdom Ltd |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| Sun Microsystems Holdings Ltd |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| Other Companies |
| OUTSIDE SUPPLIERS |
| Manufacturing Supply Chain |
| Contract Manufacturing |
| Major Suppliers |
| MARKETING ACTIVITY |
| Main Media Advertising Expenditure |
| Table 22: Main Media Advertising Expenditure by Computer Hardware Companies by Type (£000), Year Ending September 2004 |
| Table 23: The Largest Investors in Main Media Advertising Expenditure on Computer Hardware (£000), Year Ending September 2004 |
| Exhibitions and Trade Shows |
| 5. Strengths, Weaknesses, Opportunities and Threats |
| THE TOTAL MARKET |
| Strengths |
| Weaknesses |
| Opportunities |
| Threats |
| CLIENT COMPUTERS |
| Strengths |
| Weaknesses |
| Opportunities |
| Threat |
| SERVERS |
| Strengths |
| Weaknesses |
| Opportunities |
| Threat |
| PERIPHERALS/ADD-ONS |
| Strengths |
| Weaknesses |
| Opportunities |
| Threats |
| 6. Buying Behaviour |
| CUSTOMER PROFILE |
| Business Buyers |
| Table 24: Breakdown of Business IT Expenditure on Computer Hardware by Sector by Value (%), 2000, 2002 and 2004 |
| Production Industries |
| Financial Services |
| Public Sector |
| New Business Buying Patterns |
| Consumers |
| Table 25: Penetration of Computer Activities in the Evening and at the Weekend by Sex, Age, Social Grade and Region (% of adults), 2004 |
| Table 26: Ownership and Use of Computers in the UK (% of adults), 1998, 2000, 2002 and 2004 |
| 7. Current Issues |
| LOW-END SERVERS GET MORE `BANG FOR THE BUCK' |
| MULTICORE PROCESSING |
| VISUALISATION |
| PC PRODUCTION SHIFTS EAST |
| NEW DATA STORAGE TECHNOLOGY |
| CHANGING MARKET FOCUS |
| 8. The Global Market |
| OVERVIEW |
| Table 27: The Global Computer Hardware Market by Value (£m and %), 2003 and 2004 |
| 9. Forecasts |
| INTRODUCTION |
| The Economy |
| FORECASTS 2005 TO 2009 |
| Table 28: The Forecast Total UK Computer Hardware Market by Sector by Value (£m at end-user prices), 2005-2009 |
| Table 29: Growth in the UK Computer Hardware Market (%), 2005-2009 |
| FUTURE TRENDS |
| More Strategic Acquisitions and Alliances |
| A Squeeze On PC Manufacturers |
| The Rise of Service-Centric Computing |
| Grid Computing |
| 10. Company Profiles |
| 3com Uk Holdings Ltd |
| Canon Europe Ltd |
| Cisco Systems Ltd |
| Emc Computer Systems (uK) Ltd |
| Epson (uK) Ltd |
| Fujitsu Siemens Computers Ltd |
| Hewlett-Packard Ltd |
| Ibm United Kingdom Ltd |
| Sun Microsystems Holdings Ltd |
| 11. Further Sources |
| Associations |
| General Sources |
| Government Publications |
| Bonnier Information Sources |
| The computer hardware market, as defined by this Key Note Market Report, comprises three main sectors: client computers, servers and peripherals/ add-ons. Key Note estimates that, in 2004, the total UK computer hardware market was worth £11.82bn at end-user prices, a rise of 5.6% on 2003. |
| Between 2000 and 2003, the market declined in value terms as the business sector experienced difficult trading conditions. Within organisations, planning cycles shortened and organisations cancelled or postponed major, large-scale strategic projects. However, in 2004/2005, the market is experiencing more new projects from firms to enhance their systems, in terms of both applications and infrastructure. |
| The computer hardware market is increasingly competitive and the constant need to launch new products and develop new technologies is intensifying. In this environment, scale advantages are increasing. Although the market has always been driven by successful new products — which require significant investment in production and marketing — the amount of investment needed is growing, primarily as a result of the rising costs associated with the development and marketing of new products. Consequently, the availability of significant financial resources is becoming an increasingly competitive, discriminating factor in the industry. |
| In order to generate the required volume sales, major vendors are focusing on the small- and medium-sized enterprise (SME) market, i.e. the mass of UK businesses. This market sector was often the `Cinderella' of the industry, losing out to its `ugly sisters', the large enterprise and the consumer. However, this is now changing; vendors are introducing lower-cost servers and storage systems aimed at the SME sector. |
| Although businesses are now spending more on IT products, selling into this market has become more difficult. Organisations are taking a more hard-headed and systematic approach to buying hardware. Fashion and the desire to have the latest products have given way to buying tried and tested products with a track record on delivery, return on investment (ROI) and improvement in operations. |
| In addition to these, major changes are taking place regarding how hardware is being used. IT infrastructure in the Internet age is being centralised, with new concepts of delivery such as utility computing or service-centric computing coming into prominence. This is altering the structure of demand, leading to greater demand for servers and centralised storage systems, and a renewed interest in centralised control over printing resources. This is simultaneously leading to a demand for low-cost ownership of client systems and desktop printers. |
| The computer hardware market is entering into a mature phase of growth, in which consolidation and a struggle for market share will be key features. New product development (NPD) costs are set to rise and this will result in a growing pressure on companies to gain in either scale or niche focus. The big will get bigger, while the small will either go out of business or target specific niches. |
Text © 2005Key Note
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Last updated by Amanda Porteous 2005
