Strong Channel Growth Fueled By Chromebooks, PCs In 2014: NPD

The numbers are in -- channel sales in 2014 were stronger than ever, driven in part by rising sales for Chromebooks and PCs.

Channel revenue rose close to 5 percent last year to more than $62 billion, according to The NPD Group, which tracks sales through major distributors and resellers in its Distributor and Reseller Tracking Services.

The biggest channel sales driver last year, NPD found, was PCs. Despite multiple calls for the "death of the PC," it remained the largest channel product category, growing 14 percent over the year before. In particular, sales for built-to-order PCs were up, jumping 28 percent over the year before.

[Related: Have You Hugged Your PC Today? Turning PC Sales Into Profits]

Stephen Baker, vice president of industry analysis, attributed the growth to a continued demand in the business market for the refresh and upgrade of PCs, despite the influx of other tools such as tablets.

"[The PC] remains a core product and a core business tool," Baker said.

Chromebooks, in particular, saw astronomical growth in 2014, with unit sales jumping 125 percent in 2014. The last year saw big-name vendors such as Dell, Lenovo and HP jumping into the Chromebook fray, joining first movers Samsung and Acer and growing the size of the market, Baker said. The majority of those sales went to the education market, Baker said, with nearly half of all sales centered around the back-to-school period between June and August.

"I think the vast majority has been in the K-12 organizations, but ... I think it will be interesting to see what the long term impacts and opportunities are for [Google's] Chrome [operating system] as a business tool," Baker said.

Kyle Cebull, CMO at Fort Myers, Fla.-based solution provider Entech, said he has also seen strong PC and Chromebook sales. As the market looks to adopt more technologies, Cebull said he sees clients moving away from thin clients to PCs for access to key applications and other outlying requirements that aren't yet compatible with the cloud. Cebull said he is also seeing strong growth in Chromebooks, but still has yet to see much demand from outside of the education market.

Other areas of growth for the channel sales were networking hardware, up 6 percent, and component sales, up 15 percent. Baker said he saw networking driven by consistent back office growth around storage and infrastructure for all sizes of businesses. While NPD doesn't measure mobile sales for the channel, due to blurred market lines with the popularity of BYOD, Baker said he sees mobile technologies as an "underdeveloped opportunity" for the channel. In particular, he said there is opportunity for the channel around containerization technology, security and mobile device management.

Not all areas were up in sales for the year, though, with software falling 3 percent and printer consumables falling 4 percent. Baker attributed low printer consumables sales to a consistent turn away from printing, though he did say an opportunity in the market remains for managed print services. He said software sales for the year were down as OS upgrades and productivity suites were down. Entech's Cebull noted that the decline might also be due to lower upfront revenue from software-as-a-service sales.

Baker said the growth in the channel revenues, in the face of challenges posed by changing vendors and new technologies such as cloud, emphasizes the industry's value proposition to the end user. Cebull agreed, saying that, if anything, the growth numbers were underestimated for the channel. Cebull said that Entech's product growth numbers were closer to 15 percent to 20 percent last year.

"The fact that the channel continues to grow belies some of the doom and gloom [that] the cloud is going to kill the channel, the data center is going to kill the channel, mobile is going to kill the channel. None of those things seems to be coming true right now," Baker said.

PUBLISHED MARCH 9, 2015