Executive Summary

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 Ł11.82bn 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.

Price:	£ 399.00 GBP ex VAT (£ 468.82 GBP inc VAT )
Publication date:	30 Apr 2005
Licence period:	365 days

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