Leaders break away in UK hardware market

A small group of UK computer hardware resellers are outpacing the competition, adding 10 per cent to their market share in the last year.

According to research of the hardware distribution industry conducted by financial analyst Plimsoll Publishing, 148 computer hardware companies in the UK now account for 42 per cent of the market, up from 32 per cent last year.

Another 1,852 companies followed by Plimsoll saw their collective market share drop to 58 per cent.

But resellers with the right skills and product bundles have an opportunity to shine, according to Plimsoll senior analyst, David Pattison.

"If you get a good product and service customers well, the industry has the ability to allow a company to grow rapidly," he said.

"What we have is a group of guys that are getting a firm grip on the market."

The 148 leading companies grew on average by 28 per cent, with the rest of the market declining by four per cent.

The market leaders, whose sales ranged from £2m to £873m, increased their collective market size from £10.9bn last year to £13.7bn this year.

Pattison said the figures showed continued consolidation in the market. "It's happening, but it doesn't happen overnight; it's a gradual erosion," he added.

The report said the success of the market leaders is affecting the rest of the market, with 56 per cent of the market failing to increase sales.

"We look at 900 markets and that's about as high as it gets in terms of companies failing to grow," said Pattison.

Darren Scully, commercial director at reseller Nexus Open Systems, agreed that consolidation was rife but added that many so-called 'box shifters' were changing their business models to survive.

"It's all about giving customers what they want from their investments, rather than just a lot of part codes and products shifting with no thought about what the customer wants to gain," he said.

The report also showed that overall profitability in the industry is down from 2.8 per cent three years ago to 1.8 per cent last year.