The State of Cloud in the B2B Market€¦ · Hospitality Aerospace Electronics Retail Life Sciences...

Copyright 2018. The NPD Group, Inc. All Rights Reserved. This presentation is proprietary and confidential and may not be disclosed in any manner, in whole or in part, to any third party without the express written consent of NPD.

Michael Diamond, Industry Analyst, The NPD Group

The State of Cloud in the B2B Market

December 1, 2018

The NPD Group, Inc. | Proprietary and confidential 2

Agenda

1

2

3

Overall YTD Channel Performance

Growth of Cloud in the Channel

Growth of Managed Servicesin the Channel

Key Markets for Cloud and Managed Services in the Channel4

Mike Diamond, NPD analyst will discuss how the SMB market continues to gravitate towards cloud and managed services delivered by channel partners.

This session will highlight current and future areas of growth by technology and service category followed by a discussion of which industries need to digitally transform.

Find out how channel partners can most effectively serve those needs to help them achieve a competitive advantage.

Mike DiamondDirector, Industry [email protected]

NPD Contacts

The NPD Group, Inc. | Proprietary and confidential

U.S. B2B Market


Industry trendsTotal U.S. market (all channels) — 12 months ending September 2018

Source: The NPD Group US Consumer Tracking Service 12ME Sep’18| *Nielsen Retail Measurement Services, Total Food View, 52 weeks ending Sep’18 | ** Media Entertainment 12ME Jun’18 |Total $ does not include Books, measured in Units

Year over year % change

Dollars (projected)

Total $1.96T (+2.9%)

Last updated: November 2018


Industry trendsU.S. B2B channel sales — 12 months ending September 2018

Source: The NPD Group/ US Consumer Tracking Service 12ME September 2018

Year over year % change

Dollars (projected)


United States Economy vs. NPD Total B2B Market 2016–2017The United States B2B market continues to outpace Real GDP in the United States and increased that growth

Source: The NPD Group/Distributor Track and Reseller Tracking Service & BEA

1.93%

4.48%

1.50%

2.30%

2016

2017

US Real GDP NPD B2B

US Economy

NPD Group

US Economy

NPD Group


U.S. B2B Market 1H 2017 vs. 1H 2018

Time Period: January 2017 – June 2017 vs. January 2018 – June 2018Source: The NPD Group/Distributor Track and Reseller Tracking Service

$- $5 $10 $15

Components

Networking

Peripherals

Software

Systems

Billions

YTD 2018 YTD 2017YTD 2017 vs. YTD 2018

the market grew at 10%

Fastest growth area was components at 17% followed

by software and systems

Single-digit to flattish growth areas were peripherals and

networking equipment

+13%

+14%

+4%

+0%

+17%


Growth of Cloud in the Channel


Source: The NPD Group, U.S. B2B Software and Cloud Tracking Service, Distributor and Reseller, by dollar sales, 12 ME February 2018

In the last year, the U.S. B2B indirect software market grew

11% year-over-year, outpacing B2B indirect hardware growth

by 5 percentage points


SMB Purchase Intentions Overthe Next 12 Months65% of SMBs plan to purchase software in the next 12 months

Source: The NPD Group SMB Quarterly Monitor, July 2018

56%

68%

52%

39%

54%

43%

47%

64%

65%

Overall

PCs

Tablets

Servers

Printers

Networking Equipment

Storage Equipment

Cellphones/Smartphones

Software

56%71%

64%64%

55%54%

52%64%

69%76%

42%64%

45%

OverallManufacturing

InsuranceAccountingConsulting

RetailingMedical/Dental

TechnologyReal Estate

LegalEducation

EntertainmentOther

Spending Intention by VerticalTop Growth Categories

OverallManufacturing

InsuranceAccountingConsulting

RetailingMedical/Dental

TechnologyReal Estate

LegalEducation

EntertainmentOther


Vo

lum

e

High

Low

11

VAR Characteristics—Key Cloud Targets IBM, PWC, McKinsey Multi-regional presence Export Prowess Large field sales staff Larger purchasing organizations Medal / gem authorizations Change management expertise (e.g.,

IBM, PWC, etc.) Department-level expertise Large direct businesses with partners Larger technical support teams

National Solution Providers Corporate resellers Multi State & Regional Configuration expertise Highly transactional Larger field and inside sales forces Medal / gem authorizations Large technical support teams Has Cloud platforms Well capitalized Under attack from Amazon in imaging

and print, etc.

Highly fragmented market Typically 100 mile to multi-city and state

coverage Many are tied to 1 to 2 verticals with

some departmental expertise Has some managed services expertise 5 to 10 technical staff; Highly reliant on two-tier distributors for

credit, etc. Hardware vendor sweet spot for HCI,

etc.

Highly fragmented market Typically stay within a 5 to 50 zone Minimal vertical and departmental

expertise 1 to 5 technical staff Competes with traditional brick-and-

mortar, Amazon, etc. Highly reliant on two-tier distributors for

credit, tech support, etc. Key target for ISV SMB cloud strategies

(e.g., Microsoft, etc.)

Fortune 100 VAR

Fortune 1000 VAR

SMB VAR

SOHO VAR


1—U.S. B2B Non-Security Software TTMin Dollars

Source: The NPD Group/Distributor Track and Reseller Tracking Service

Dollar Market Share %

-20%

-10%

0%

10%

20%

30%

40%

50%

-5% 0% 5% 10% 15% 20% 25% 30%

Content &

Collab.

Monitoring &

Mgt.Storage

Utils Mgt.

OSCloud

DP&R

Virtualization

YoY

Do

llar

Gro

wth

% The U.S. B2B non-security software market grew from

$131.8B in 2017 vs. $15.1B in 2018 or a 15% year-over-year

growth rate;

BI &

RDBMS


U.S. B2B Cloud Infrastructure & Platform asa Service Q1 2015–Q2 2018


Cloud Infrastructure &PaaS Quarterly Revenue

Cloud Infrastructure &PaaS License Terms in Units

$0

$20

$40

$60

$80

$100

$120

$140

$160

Q1

20

15

Q2

20

15

Q3

20

15

Q4

20

15

Q1

20

16

Q2

20

16

Q3

20

16

Q4

20

16

Q1

20

17

Q2

20

17

Q3

20

17

Q4

20

17

Q1

20

18

Q2

20

18

Mill

ion

s

Q2 2017 vs. Q2 2018

+16%

30 Days 1 Year Other


Growth of Managed Servicesin the Channel


Services Typically Bought With Purchase

Source: The NPD Group – SMB Quarterly Technology Monitor, July 2018

PC Purchase Storage Purchase Server Purchase

38%

34%

33%

22%

Cloud BasedApplications

ExtendedWarranties

Services &Maint.

Insurance

27%

23%

9%

5%

5%

ExtendedWarranties

Services &Maint.


Installation

Insurance

37%

35%

34%

29%

Service &Maint.

ExtendedWarranties


Installation


2—U.S. B2B Security Software TTM in Dollars


Dollar Market Share %

YoY

Do

llar

Gro

wth

% The U.S. B2B security software market grew

from $4.3B in 2017 vs. $4.7B in 2018 or

a 11% year-over-year growth rate;

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

-2% 8% 18% 28% 38% 48%

DLP&

EPP

Content &

Collab.SIEM

IAM


U.S. B2B Security Software Landscape TTM (October 2017–Sept 2018) Dollars


Symantec

McAfee

IBMPalo Alto Networks

FireEye

TrendMicroForcepoint

SophosCitrix

VMWareIvanti

Others

SymantecSymantec Symantec

McAfee

Palo Alto Networks

IBMIBM

McAfee

Ivanti

TrendMicro

TrendMicro

Forcepoint

Others

Others

Sophos

Sophos

Others

Cisco

Cisco

Cisco

RSA

RSA

Check PointSonic Wall

Check Point

Imprivata

Novell

Forescout

Centrify

Tenable

HPE

Blue Coat

AVAYA

DLP & Endpoint Protection IAM SIEM Gateways & Firewall

$4.7B $316M $1.0B $1.9B


U.S. B2B Hyperconverged Systems by Price Band Units—Q1 2016–Q2 2018


The less than $5,000 segment has rapidly gained north of 60% of unit shipments which is also making hyper converged more appealing to mainstream small businesses and solution providers

0%

20%

40%

60%

80%

100%

Q1

20

16

Q2

20

16

Q3

20

16

Q4

20

16

Q1

20

17

Q2

20

17

Q3

20

17

Q4

20

17

Q1

20

18

Q2

20

18

<=$4,999.99 $5,000 - $9,999.99 $10,000 - $19,999.99 $20,000 - $39,999.99 >=$40,000


U.S. B2B Hyperconverged System vs. x86 Server Units—Q1 2016–Q2 2018


From Q1 2016 to Q2 2018, the hyperconverged systems market has grown at a 40% unit quarterly vs. a -1% quarterly CAGR for the x86 server market and capturing 10% of unit share as SMBs seek integrated solutions

0%

20%

40%

60%

80%

100%

Q1

20

16

Q2

20

16

Q3

20

16

Q4

20

16

Q1

20

17

Q2

20

17

Q3

20

17

Q4

20

17

Q1

20

18

Q2

20

18

HCI x86 Servers Q2 2017 vs. Q2 2018

-4%

+173%


Key Markets for Cloud & Managed Services


Highly Fragmented Markets are Growth Areas for the IT Channel

Source: Small Business Association

Retail Healthcare & Social Hospitality Construction Wholesale

Manufacturing Real Estate, etc. Professional Services Other

1-499 US Small Biz by Employee Size


5 Generations of Buyers


Traditionalists Baby Boomers Gen X Millennials Gen Z


Entertainment Banking Logistics Insurance Government

Energy Telecommunications Chemicals Manufacturing Automotive

Hospitality Aerospace Electronics Retail Life Sciences

Utilities Pharmaceuticals Resources High Tech Information Technology


Women’s Clothing Stores Pet Stores + Veterinary

Health Food Market Video Games


Typical Wins Departmental Focus



Entertainment Banking Logistics Insurance Government

Energy Telecommunications Chemicals Manufacturing Automotive

Hospitality Aerospace Electronics Retail Life Sciences

Utilities Pharmaceuticals Resources High Tech Information Technology


Chiropractors Physical Therapists

All-in One Services Dental Offices


Thank youThank you

28

#NGC18 @TheChannelCo

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The State of Cloud in the B2B Market€¦ · Hospitality Aerospace Electronics Retail Life Sciences...

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