Strong dollar pushing PC prices up, says Gartner

Some regions to see 10% price increases in local currencies

Tags: DesktopsGartner Inc. (www.gartner.com/technology/home.jsp)
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Strong dollar pushing PC prices up, says Gartner PC vendors selling to Europe and Japan have little choice than to raise prices to preserve profits, Gartner said
By  Tom Paye Published  May 4, 2015

Prices of personal computers are set to increase by up to 10% in some regions, as vendors seek to offset the effects of currency devaluation, according to a new report from Gartner.

In its report, Gartner said that device vendors will be under pressure this year to reduce the effects of the rising dollar against other currencies, and that raising the prices of their PCs in some regions will be the most effective way to do so. The Eurozone and Japan are expected to see the sharpest price increases, the research house said.

"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% since the start of 2015, have little choice than to raise prices to preserve profits."

Gartner said that it expects end-user spending in Western Europe to reach $116m in constant dollars in 2015 - a 4% increase over 2014. This increase, however, will simply reflect the expected price increases in local currency, Gartner said.

"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," said Atwal.

"However, vendors' margins will fall, even as they shift their shipment focus to the regions least affected by these currency effects."

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.

At the same time, in the enterprise world, 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, Gartner said.

"Large organisations will look to lengthen their PC lifetimes by six months (10%) in comparison with 2014, rather than buying less expensive models or removing requirements for key features," said 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."

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