Confinement to boost mobile PC market, notes Futuresource Consulting
At the time of writing his market review, Boreham notes that school closures have been instigated in 34 countries, with intended closure periods ranging from short-term to mid-April and the Easter break to indefinitely.
The demande surge has been driven partly by an increase in demand from Education Ministries, school districts and schools in response to impending school closures and the need for students to have devices for distant learning, he notes, observing another factor, a drawdown of devices by the channel partners in a bid to ensure inventory ahead of calendar Q2, which is the traditional peak buying season. With concerns over possible shortages during this period, some OEM’s have tried to control the allocation of stock to maintain supply to large, mid-sized and small-scale channel partners alike. Therefore, high demand levels for Chromebooks and Windows devices has resulted in depleted stock levels for some of the OEM’s and their key distribution partners in some countries, Boreham writes.
Although several of the leading tier-one OEM’s entered 2020 with healthy inventory levels, bolstered by unsold stock from 2019, some OEM’s and distributors are running with depleted inventories, raising concerns over Q2 and whether OEM’s will be able to replenish stock levels to meet Q2 shipment commitments, both to existing projects and anticipated run-rate orders.
Despite China relaxing its COVID-19 restrictions, OEM’s are still concerned over shortages of batteries, displays and silicon for CPU’s during 2020. Restrictions on travel and newly re-introduced border customs checks even within the EU are also having an impact on supply chains and shipping. Even with China relaxing its lockdown and ramping up its industry, there is uncertainty as for how long this would work if the virus infection rates were to increase, calling for prolonged social and working restrictions.
Hence Boreham expects OEM’s to struggle to meet on-time deliveries, pushing orders that have already been signed off into late Q2 or even into Q3, as the OEM’s try to catch up. A by-product of expected device shortages may be an increase in average selling price, though the new economic climate may now impact device and transportation costs.
“The pressure on the OEM’s to replenish inventory levels shines a spotlight on current operational practices right across the supply chain, which are largely focused on ‘Just in Time’ replenishment. While these practices remove the expense of purchasing and storing high levels of stock, as well as alleviating the risk of being left with unsold, obsolete inventory, they leave proponents exposed when the supply chain is compromised”, the analyst writes. It may only be during Q4 that OEM’s begin to stock build to meet Q1 and part of Q2 2021 demand.
Despite potential blows to the global PC market, many of the EdTech software providers are seeing a boost in share price and user-base as schools close, particularly companies with remote learning capabilities. Instructure and Blackboard, both learning management solution providers, are working towards increasing bandwidth to handle the spike in its user base.
Both Google and Microsoft have been swift in giving support to the education community by making key aspects of their platforms available free of charge until the end of the summer term. Google has made its advanced features for its Hangouts meeting application available to G-Suite for Education users, giving them recording functionality, extended streaming and Hangout meeting capacity.
Microsoft has made its Minecraft Education Edition free of charge to teachers and students with valid Microsoft 365 Education accounts, complete with 50 lesson plans. In addition, Microsoft has been proactive in reaching out to schools to highlight the range of resources that they have available to enable distance learning. Zoom has also decided to offer free versions of its solution to countries affected by the outbreak, including Italy, US and Japan.
While the educational sector is rolling out distance learning programs and somehow catching up with confinement measures, the strain is also on consumer devices, with parents scrambling to equip their children with a mobile PC device for home learning. With no influence from the schools in the device purchase decision, these sales stand outside of the traditional BYOD (Bring Your Own Device) market.
The economic impact of the virus in 2020 may have aftershocks into 2021 and beyond, concludes the analyst, and the possibility of a global recession is coupled with the fact that governments have had to instigate huge expenditure to fight the virus and cushion the impact on the economy.
But constrained budgets as a result of cutbacks could become a catalyst for the growth in BYOD (Bring Your Own Device), as the burden of investment in devices is pushed to the parents.
Futuresource Consulting – www.futuresource-consulting.com