PC vendors will have to raise prices in 2015 due to currency devaluation, according to Gartner, Inc. The hardest hit are vendors in the Eurozone and Japan, who are expected to increase prices by up to 10 percent. Gartner recently reported worldwide PC shipments fell by 5.2 percent in the first quarter of 2015, led by a sharp decline of shipments for desktop PCs.
“We are currently seeing the sharp appreciation of the dollar against most other currencies reflected in companies’ earnings results,” said Ranjit Atwal, research director at Gartner, in a statement. “PC vendors selling to Europe and Japan, where local currencies have fallen up to 20 percent since the start of 2015, have little choice than to raise prices to preserve profits.”
Gartner estimates that end-user spending in constant dollars in Western Europe will reach $116 billion in 2015, a four percent increase over 2014. The increase is based on the expected price increases in local currency (see Table 1).
“Device vendors will mitigate the impact of their declining “dollarized” 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 further stated. “However, vendors’ margins will fall, even as they shift their shipment focus to the regions least affected by these currency effects.”
As a result, it will cause some changes in consumer spending, said Gartner. Here is Atwal’s forecast:
- 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 percent 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 percent of the market.
- Feature-driven consumers (of PCs priced at over $800) will extend lifetimes by 10 percent to compensate for higher prices, and absorb remaining price increases. This segment is expected to be 30 percent of the market.
On the enterprise purchasing side, Atwal expects large businesses to prioritize “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 companies are expected to hold onto their PCs by another six months compared to last year, rather than buying less expensive models or those with fewer features. Purchasing departments also are expected to put optical drive and optional accessory purchases on hold.
“While we expect large organizations to cut their PC unit purchases by 20 percent during 2015, due to price rises, small businesses will behave like value-driven consumers and look to purchase consumer PCs instead,” said Atwal.