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Gartner’s latest New Zealand shipment forecasts makes for grim reading if you are in the device business.

The total device market is set to drop by 14.6 percent in 2020 when compared with 2019. That means a total of 360,000 fewer devices.

New Zealand fares worse than the rest of the world which Gartner says will see a 13.6 percent fall in device unit shipments.

Falls everywhere

There are falls in each category Gartner measures, see the table.

New Zealand shipments forecast by device type (thousands of units)
Device Type20192020
Traditional PCs (Desk-Based and Notebook)439396
Ultramobiles (Premium)199190
Total PC Market637585
Ultramobiles (Basic and Utility)538474
Computing Device Market1,1761,059
Mobile Phones1,3251,077
Total Device Market2,5002,136
Due to rounding, some figures may not add up precisely to the totals shown.
Thin and light notebooks are listed under premium ultramobiles
Tablets and Chromebooks are listed under basic ultramobiles
Source: May (2020)

Mobile phone sales have fallen faster than computing devices. Gartner forecasts 1.08 million units in 2020 compared with 1.36 million units in 2019. That’s a drop of nearly 19 percent.

The analyst company says it expects consumers to extend the life of their mobile phones replacing them on average once every 2.7 years. For more on this see How long should I keep my phone?

Pandemic device impact

Looking at the worldwide numbers, Gartner says the fall could have been so much worse if it were not for pandemic lockdowns. Because millions of people were forced to work or study from home there was an increase on spending on notebooks and tablets.

Gartner says getting on for half of all employees will work remotely for some or all of the time after the pandemic. This compares with around 30 percent of employees beforehand.

This has accelerated the move from desktop PCs to notebooks.

Phones

While people have used their phones more during the lockdown, Gartner says lower disposable incomes mean that people will upgrade more slowly than in the past. Gartner sees the average life of a mobile phone increase from 2.5 to 2.7 years.

One other trend spotted by Gartner is the relative lack of interest in 5G handsets. Before the pandemic it was widely thought that the appearance of 5G mobile networks would kick-start a handset upgrade cycle.

Gartner now forecasts that 5G phones will only account for 11 percent of handset shipments this year. In part this is because of the delayed delivery of new handsets. Gartner also says the extra charges imposed on 5G customers is inhibiting sales.

A green data centre industry would unlock new infrastructure and create jobs.

Writing at the New Zealand Herald, Warehouse founder Sir Stephen Tindall makes the case for building a clean, green data centre hub in this country: The green, high tech opportunity NZ can’t afford to miss.

He says:

New Zealand has the opportunity to develop a green data centre industry that serves not only New Zealand government and corporate clients, but could position our country as the leading provider of green data centres to the Asia-Pacific region, much like Scandinavia has done for Europe.

As a global industry, data centre companies and users are leading the way towards carbon neutrality by investing in building new, modern centres that run on green energy. With our country’s high percentage of renewable energy sources, we are perfectly positioned to take advantage of this explosively growing industry.

Tindall is right. We are well placed to do this. Most of our energy is renewable. We have the skills needed to make this work.

We are much better placed to build data centres than a decade ago when Tindall was one of a team of entrepreneurs behind Pacific Fibre. That was an abandoned attempt to build a submarine cable between New Zealand and the West Coast of the USA. Tindall’s thinking was ahead of the game. Now there are four cables connecting New Zealand to the world.

Tindall makes a strong green case for New Zealand pushing further into data centres. It would be good for jobs too.

But there’s another argument for investing in New Zealand data centres. The term isn’t fashionable anymore, but there was a time when our leaders often talked about making New Zealand the Switzerland of the South Pacific. We are, in relative terms, a neutral player in international politics, not a threat to anyone. At the same time we have a mature political and legal system.

Data centres and cloud computing hubs are subject to the laws of the countries they are located in. Our laws are benign. We are not a totalitarian state, nor do we have a worrying state security apparatus demanding to snoop on other people’s data. We can leverage these aspects. New Zealand has a strong brand as clean and green, it also has a growing reputation for probity and values.

 

New Zealand’s spending on information technology is set to drop by 7.3 percent when compared with 2019. Gartner, a research firm, forecasts IT spending will be less than NZ$12.6 billion. This is a billion dollars less than last year.

While the drop is significant, New Zealand will fare slightly better than most of the world. Gartner forecasts the worldwide spend will drop eight percent. Australia faces a six percent fall.

The drop is a direct result of the Covid–19 pandemic and the expected international recession that will follow.

Critical IT a priority

Gartner says companies around the world are prioritising spending on mission critical technologies and services. For now they are shelving their growth or digital transformation projects.

       
New Zealand IT Spending Forecast (Millions of New Zealand Dollars)
New Zealand2019Growth2020Growth
Data Centre4051.0%347-14.3%
Enterprise Software2,19612.1%2,113-3.8%
Devices1,950-0.3%1,646-15.6%
IT Services3,9894.9%3,799-4.8%
Communications Services5,0250.1%4,665-7.2%
Overall IT13,5653.3%12,570-7.3%
 

Analyst John-David Lovelock says the bright spot in the international forecast is spending on public cloud services. This includes messaging, telephony and conferencing. This is not forecast to do as well in New Zealand.

The sharpest drop in New Zealand is expected in purchases of digital devices. Gartner forecasts a massive 15.6 percent fall in spending down to $1.6 billion. Last year it was the only sector to show negative growth. The fall is in line with the worldwide trend.

Gartner forecasts an equally steep 14.3 percent drop in spending on data centres, although the absolute value of the segment is far lower. This year it will fall from $405 million to $347 million.

Communications

Communications services will fall 7.2 percent according to Gartner. This is well ahead of the 4.5 percent worldwide figure.

Lovelock says he doesn’t see a recovery until the third quarter of 2021. Moreover he says it will take until 2024 for the economy to get back on its long term track.

He says: “Recovery will not follow previous patterns as the forces behind this recession will create both supply side and demand side shocks as the public health, social and commercial restrictions begin to lessen.”

Lovelock also warns not to expect a V shaped recover. Which also means it isn’t going to be quick. IT may be in better shape than many other sectors but we’re in for a bumpy ride.

Microsoft’s uses Surface to take the laptop fight to Apple. While it leaves mainstream Windows hardware to the likes of HP and Dell, its own brand adds an element of sophistication and a different take on innovation.

This week there was a new Surface Book and a new Surface Go.

Surface Go is Microsoft’s smallest and cheapest tablet. Local prices start at less than NZ$600. You can get cheaper tablets, but anything other than an iPad or Surface in that price range or lower is likely to disappoint.

More screen, less bezel

The new Surface Go 2 is the same size as the earlier model, but the screen size bumps from 10 to 10.5 inches. That’s thanks to smaller bezels, the edge around the screen. Surface Go 3 works with existing Go 3 accessories.

That kind of size increase might not sound much, in this case the screen resolution also increases to 1920 x 1280 pixel. The battery is bigger, Microsoft says you now get 10 hours.

There is also a new model with a faster Intel 8th Gen Core m3 processor. Yet the base model still comes with a Pentium Gold processor, that’s the same as the earlier Surface Go. You might want to avoid that.

Surface Book 3

It has been three years since the Surface Book 2. Longer since the first Surface Book. The models brought innovation and style to Windows, although at a high price.

The Surface Book 3 has a big speed bump, there are 10th generation Intel processors and updated NVIDIA graphics.

Sadly, there’s not much else to excite potential buyers. Physically the new laptops look much the same as the models they replace.

They still have the neat ability to unlock and remove the screen so it can be used as a large tablet. In my review of the earlier Surface Book I speculated that owners rarely use this feature. That appears to be correct.

Interesting hybrid

It still feels like the most interesting variation on the Windows 2-in–1 hybrid theme. Yet it would be nice if there was some fresh innovation in this department. When the first Surface Books appeared the design was well ahead of the curve, today other notebook models feel more up to date.

Microsoft hasn’t sent out review models in New Zealand to date. From the promotion material it looks as if the new Surface Book models continue the solid, well constructed design. Surface Books feel more robust than other mainstream PCs. Apparently it is heavy by laptop standards at about 1.5 kg for the 13.5-inch model.

The next comment will annoy many Windows fans, but the touch screen Windows 10 operating system doesn’t always feel right on 2-in–1 hybrids from other brands. Microsoft seems to have nailed this aspect of design in the past and there’s no reason why the Surface 3 doesn’t continue that legacy.

HP Chromebook EnterpriseSuddenly after years of decline personal computers are hot again. Sales are up and there are shortages of some models.

It may not last. Indeed the full year could still see an overall decline in sales. Yet for now, the PC has regained relevance.

After playing second fiddle to the phone, the focus is back on the PC. That mainly means laptops.

The move to working from home has seen an explosion in demand for hardware with a decent size screen and a proper keyboard.

It’s not just office workers setting up shop on the kitchen table, it’s also students logging on to remote lessons and many others turning to digital entertainment to fill the hole left when you can’t go out so much.

HP in a good place today

HP is in a good place to exploit the exploding demand. It is, after all, New Zealand’s best selling PC brand by a fair clip. It is the leader in many countries around the world and even where it doesn’t dominate, it is an important player.

Apple’s computer strategy may not be as laser focused today as it has been in recent years, but it focuses on a handful of product lines. Microsoft does something similar with its Surface hardware.

In contrast, HP takes the opposite approach. It throws a lot of ideas against the wall knowing full well that some will stick.

This week’s announcements in the US follow that approach. The company has focused on two distinct, non-mainstream PC sectors. At one extreme it has gone big with new Omen gaming PCs. At the other there are enterprise-focused Chromebooks.

The Omen announcements are grunty machines ideal for people who need lockdown entertainment. There is a large screen 27-inch gaming monitor with 165Hz refresh rate and 1ms response time.

HP Omen 27i Gaming Monitor
HP Omen 27i Gaming Monitor

The new Omen computers are built around high performance Intel i9 and AMD Ryzen 9 CPUs. They use Nvidia RTX 2080 or AMD Radeon RX 5700 XT graphics cards. Also in the mix are a fancy new case design, Cooler Master cooling components and HyperX high-speed Dram along with WD Black SSDs.

A good Omen

Gaming PCs have been a success story for HP. They are one of the few PC categories to experience growth and because the products tend to be premium throughout, margins are healthy. With people spending even more time at home, they are likely to continue selling well.

We don’t see them so much in New Zealand, but elsewhere in the world Chromebooks are very popular in education. HP makes plenty of affordable low-end Chromebooks to address this market. Now it is parlaying some of that expertise to meet a corporate need for low-cost cloud-based hardware.

The revived Enterprise 14 G6 Chromebook won’t win any prizes for performance. It doesn’t have to. It is as a solid cloud-based laptop with a 14-inch display. There are more swept up Chromebooks and one model comes in the 2-in-1 format.

There’s also a mobile thin client, which is, in effect, a laptop for people who use a virtual desktop, another trend which is more prevalent overseas than in New Zealand.

Elsewhere HP has a new laser printer for home users. Its sales pitch is that it comes with seven times as much toner as earlier laser printers.