Revenues of Top-Tier IT Distributors Slipped From 2022 Highs in 1Q23

IT distributor revenue for the first quarter of 2023 contracted by 6% year-over-year to $19.1 billion, according to IDC. The decline was driven by reduced sales in consumer device categories like personal computing and AV which saw double-digit year-over-year revenue decrease by 28.3% and 24.5%, respectively. On the positive side, Software, Services, and Network Infrastructure enjoyed positive year-over-year growth and illustrate how dynamic the distribution channel can be.

Personal Computing sales through Tier 1 IT distribution mirror the trends in the overall market, and after two-quarters of revenue declining by more than 20% year-over-year, revenues are down to roughly pre-pandemic levels. As a result, personal computing slipped below software to become the second-largest category for North America Distribution Tracker (NADT) revenue. Connected to this sharp contraction in personal computing sales is the drop in PC Monitor revenues that declined 35.5% year-over-year and pulled down the whole AV product group.

“Following a surge in sales during the COVID pandemic, device sales are slowing in response to inflation and other spending priorities," said Ruth Flynn, research vice president at IDC Tracker & Data Products. "In the current environment, spending on enterprise and network infrastructure, software, and services has been more resilient as companies continue to invest in digital transformation and enterprise resiliency.“

Network infrastructure grew 19.7% year-over-year in 1Q23 and was spurred by substantial growth in ethernet switches and access points at 36.7% and 50.9%, respectively. These two categories account for 63% share of networking infrastructure devices with Cisco, HPE, and Juniper leading the market.

Both software and services grew 6.6% year-over-year to $3.86 Billion and $3.3 Billion, respectively. Several of the Top 5 companies in the software group enjoyed significant growth in 1Q23 including Autodesk at 30.5% year-over-year growth and Palo Alto Networks at 20.6%. Services associated with network infrastructure hardware as well as services associated with software sold well through the distribution channel, strengthening services' position among the Top 3 product groups.