The State of Cloud in the B2B Market€¦ · Hospitality Aerospace Electronics Retail Life Sciences Utilities Pharmaceuticals Resources High Tech Information Technology. The NPD Group,
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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 Analystmichael.diamond@npd.com
NPD Contacts
The NPD Group, Inc. | Proprietary and confidential
U.S. B2B Market
The NPD Group, Inc. | Proprietary and confidential 4
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
The NPD Group, Inc. | Proprietary and confidential 5
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)
The NPD Group, Inc. | Proprietary and confidential 6
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
The NPD Group, Inc. | Proprietary and confidential 7
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%
The NPD Group, Inc. | Proprietary and confidential
Growth of Cloud in the Channel
The NPD Group, Inc. | Proprietary and confidential 9
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
The NPD Group, Inc. | Proprietary and confidential 10
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
The NPD Group, Inc. | Proprietary and confidential
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
The NPD Group, Inc. | Proprietary and confidential 12
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
The NPD Group, Inc. | Proprietary and confidential 13
U.S. B2B Cloud Infrastructure & Platform asa Service Q1 2015–Q2 2018
Source: The NPD Group/Distributor Track and Reseller Tracking Service
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
The NPD Group, Inc. | Proprietary and confidential
Growth of Managed Servicesin the Channel
The NPD Group, Inc. | Proprietary and confidential 15
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.
Cloud BasedApplications
Installation
Insurance
37%
35%
34%
29%
Service &Maint.
ExtendedWarranties
Cloud BasedApplications
Installation
The NPD Group, Inc. | Proprietary and confidential 16
2—U.S. B2B Security Software TTM in Dollars
Source: The NPD Group/Distributor Track and Reseller Tracking Service
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
The NPD Group, Inc. | Proprietary and confidential 17
U.S. B2B Security Software Landscape TTM (October 2017–Sept 2018) Dollars
Source: The NPD Group/Distributor Track and Reseller Tracking Service
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
The NPD Group, Inc. | Proprietary and confidential 18
U.S. B2B Hyperconverged Systems by Price Band Units—Q1 2016–Q2 2018
Source: The NPD Group/Distributor Track and Reseller Tracking Service
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
The NPD Group, Inc. | Proprietary and confidential 19
U.S. B2B Hyperconverged System vs. x86 Server Units—Q1 2016–Q2 2018
Source: The NPD Group/Distributor Track and Reseller Tracking Service
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%
The NPD Group, Inc. | Proprietary and confidential
Key Markets for Cloud & Managed Services
The NPD Group, Inc. | Proprietary and confidential 21
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
The NPD Group, Inc. | Proprietary and confidential 22
5 Generations of Buyers
Source: The NPD Group/Distributor Track and Reseller Tracking Service
Traditionalists Baby Boomers Gen X Millennials Gen Z
The NPD Group, Inc. | Proprietary and confidential 23
Entertainment Banking Logistics Insurance Government
Energy Telecommunications Chemicals Manufacturing Automotive
Hospitality Aerospace Electronics Retail Life Sciences
Utilities Pharmaceuticals Resources High Tech Information Technology
The NPD Group, Inc. | Proprietary and confidential 24
Women’s Clothing Stores Pet Stores + Veterinary
Health Food Market Video Games
The NPD Group, Inc. | Proprietary and confidential 25
Typical Wins Departmental Focus
Source: The NPD Group/Distributor Track and Reseller Tracking Service
The NPD Group, Inc. | Proprietary and confidential 26
Entertainment Banking Logistics Insurance Government
Energy Telecommunications Chemicals Manufacturing Automotive
Hospitality Aerospace Electronics Retail Life Sciences
Utilities Pharmaceuticals Resources High Tech Information Technology
The NPD Group, Inc. | Proprietary and confidential 27
Chiropractors Physical Therapists
All-in One Services Dental Offices
The NPD Group, Inc. | Proprietary and confidential
Thank youThank you
28
#NGC18 @TheChannelCo
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