PC buy-down forecast as devaluation puts the squeeze on prices

Computer buy-down trend forecast.
(Source: Dell.)
Date:30 April 2015 Tags:,

Currency devaluation will force PC prices up as much as 10 per cent this year, causing nearly one in three consumers to buy down, according to Gartner, the world’s leading information technology research and advisory company. Belt-tightening effects among business users will include keeping PCs longer – and purchases of optical drives and optional accessories will disappear.

Gartner said prices of PCs in the Eurozone and Japan, in particular, will increase by up to 10 per cent during 2015.

“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. “PC vendors selling to Europe and Japan, where local currencies have fallen up to 20 per cent 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 billion, a 4 per cent increase over 2014. (*Constant dollars are the dollarised equivalent of local-currency results, assuming fixed or constant exchange rates. As a result, constant-dollar growth rates faithfully reflect growth rates in local currencies.)  This increase reflects the expected price increases in local currency (see Table 1).

Table 1: Total device end-user spending in constant dollars, Western Europe, 2013-2017 (millions)

2013 2014 2015 2016 2017
End-user spending 110 551 111 571 116 086 117 381 113 864

Source: Gartner (April 2015)

Gartner analysts say that what we’ll see among PC consumers is:

·                     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 per cent 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 per cent of the market.
·                     Feature-driven consumers (of PCs priced at over $800) will extend lifetimes by 10 per cent to compensate for higher prices, and absorb remaining price increases. This segment is expected to be 30 per cent of the market.

“Large organisations will look to lengthen their PC lifetimes by six months (10 per cent) in comparison with 2014, rather than buying less expensive models or removing requirements for key features,” said Mr 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 per cent during 2015, due to price rises, small businesses will behave like value-driven consumers and look to purchase consumer PCs instead,” Mr Atwal concluded.

* Source: Gartner