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Price hikes for PCs?

30 Apr 15

Analyst firm Gartner is expecting the cost of PCs will need to be increased by device vendors to offset the effects of currency devaluation.

"We are currently seeing the sharp appreciation of the dollar against most other currencies reflected in companies' earnings results," says Ranjit Atwal, research director at Gartner. "PC vendors selling to Europe and Japan, where local currencies have fallen up to 20% since the start of 2015, have little choice than to raise prices to preserve profits." 

In 2015, Gartner estimates that end-user spending in constant dollars in Western Europe will reach $116 million, a 4% increase over 2014. 

"Device vendors will mitigate the impact of their declining ‘dollarised’ profits by taking advantage of single-digit-percentage decreases in PC component costs during 2015, and by selling PCs with fewer features to keep prices down," Atwal says. "However, vendors' margins will fall, even as they shift their shipment focus to the regions least affected by these currency effects." 

Consumer Behaviour
In mature markets, PC sales are determined by price and, through 2016, Gartner expects that 30% of PC consumers will buy down the price curve. Gartner analysts also expect the following behaviors amongst PC consumers: 

        Price-driven consumers (of PCs priced at less than $500) will purchase less expensive PCs with lower specifications to counter price rises. This segment is expected to be 30% of the market.
        Value-driven consumers (of PCs priced at $500 to $800) will delay purchases due to rising prices. This segment is expected to be 40% of the market.
        Feature-driven consumers (of PCs priced at over $800) will extend lifetimes by 10% to compensate for higher prices, and absorb remaining price increases. This segment is expected to be 30% of the market.

Business Behavior
In 2015, Gartner expects large businesses will prioritise other IT budgets with currency-driven shortfalls, such as those for software and services, for which they will draw money from the PC budget. "Large organisations will look to lengthen their PC lifetimes by six months (10 percent) in comparison with 2014, rather than buying less expensive models or removing requirements for key features," says Atwal. "In addition, purchases of optical drives and optional accessories will disappear." 

"While we expect large organisations to cut their PC unit purchases by 20% during 2015, due to price rises, small businesses will behave like value-driven consumers and look to purchase consumer PCs instead," Atwal concludes.

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