Commercial Technology Industry Analyst
As many industry insiders can attest, Q1 is the most important quarter of the year for the commercial technology market. For many businesses, Q1 coincides with a new fiscal year, which means new budgets, capital investments, and technology upgrades.
In Q1 of 2019, the Canadian distribution market had revenue growth of +3%. PCs, which account for 25% of total market revenue, showed slower growth than in previous quarters, which tempered total market growth overall.
Multimedia categories kept pushing revenue higher as the segment grew +12%, driven in particular by Monitors and Large Format Displays, which showed significant growth of +12% and +34% respectively. In the case of the Standard Monitor former, multiple screen usage for productivity purposes is one of the top drivers of growth. Another significant factor to consider is employees are increasingly using laptops compared to desktops, and many of these employees prefer having the option of using a larger screen to enhance their experience when “plugged in” at the office.
Large Format Displays (also known as Digital Signage) strong growth is being fueled by improved quality and innovation in screens. These screens are quite diverse and can be used in a variety of settings such as offices, grocery stores, hotels, schools, airports, or board rooms. When it comes to this category, products are becoming increasingly more affordable, while at the same time offering better resolution and an enhanced visual experience. In some situations, these screens are even being utilized outdoors.
Total hardware finished Q1 with modest growth of +1% whereas total software grew +10%. This is significant given the fact that total software accounts for approximately 20% of total distribution revenue. Most of the growth in total software is in the small VAR channel which accounted for more than half of all of the aforementioned growth. This is a strong indication that small businesses are increasing their presence in the software market. Business applications software has shown high double-digit growth in the Small VAR segment and has also shown the highest overall growth in the total market.
Overall, it has been great seeing the market post good growth this quarter, although we must note the pace of this growth seems to have tempered. This tells us that the high investment we have observed in past few quarters in categories like PCs, or infrastructure categories like servers and hyper-converged, may also be cautiously curtailed. While it’s still early in the year, it’s safe to say that this low single digit growth may be a glimpse of what’s to come during Q2, Q3, and Q4 as there is no major end of life refresh expected during the rest of 2019.