In the fourth quarter of 2023, the revenue of IT distributors North America experienced a 6.2 percent year-over-year decline, reaching $20.6 billion, IDC said.
IDC North America Distribution Tracker (NADT) indicated that this marks the fifth consecutive quarter of year-over-year revenue contraction, following a remarkable nine-quarter growth period that ensued after the onset of the COVID-19 pandemic in early 2020.
During this prolonged period, enterprise spending, particularly in software and services, along with networking, sustained consistent growth. However, consumer categories such as personal computing, audio/video (AV), imaging, consumer electronics, and peripherals and accessories, which saw a surge in spending during the pandemic, have recently been tapering off from their peak levels.
Ruth Flynn, research vice president at IDC Tracker & Data Products, commented on the situation, stating, “Recovery and repercussions of the pandemic continue to impact the IT distribution market going into 2024. From macro conditions like stabilizing inflation to the drivers of technology spending in enterprise and slow consumer markets, we continue to see the market adapting to the pandemic disruption. Despite the difficult current environment, we expect overall IT distribution spending to see growth later in the year, and to see much stronger growth from some categories and vendors.”
The fourth quarter, especially December, traditionally holds significance for software sales. Although December 2023 witnessed a slightly subdued performance, the overall software sales through distribution managed to grow by 1.1 percent year over year, amounting to $4.27 billion.
Notably, over 50 percent of software sales were attributed to System Infrastructure Software. Palo Alto, in the Security software category, achieved robust sales with a remarkable year-over-year growth of more than 100 percent. Similarly, Nutanix recorded a 21 percent year-over-year revenue growth in storage software sales.
Following five consecutive quarters of double-digit year-over-year growth, the Network Infrastructure product group witnessed a slowdown to 1.7 percent year-over-year growth, reflecting the clearing of pandemic backlogs. The quarter concluded with $2.37 billion in sales, with Ethernet Switches still showing a year-over-year growth of 9.5 percent. However, Wireless LAN experienced a significant contraction, with a 30 percent year-over-year decline in revenues.
The contraction in the Personal Computing product group moderated from double-digit declines in previous quarters to a 7.6 percent year-over-year decline in Q4 2023. With total sales amounting to $3.3 billion, the market appears to have settled back to pre-pandemic levels. While reduced sales for PC peripherals and other consumer devices persisted into Q4 2023, there is optimism that this trend may signal increased sales for PCs in 2024.
