The situation isn’t expected to change soon
With the world beginning to round the corner where the pandemic is concerned, life is slowly, in fits and starts, beginning to return to normal. As that happens, demand is surging everywhere, but supplies are still lagging. You've probably seen this in the form of higher gas prices and higher prices on basic food items, with chicken being notable. Of course, we can also expect to see higher prices in the PC market.
Not only is there a worldwide chip shortage, but major PC manufacturers are reporting shortages in a raft of other components as well, which will inevitably lead to higher consumer prices. In fact, several major PC manufacturers, including Dell, Lenovo, and HP, have already outright stated that they'll be passing their increased costs on to consumers in the months ahead.
A shortage of DRAM, SSDs, batteries, and LCDs have conspired to drive up PC prices, Gianfranco Lanci, corporate president and chief operating officer at Lenovo, said during an earnings call on Thursday. It’s difficult to pin a number on the price increase because of the number of PC configurations available.
The cost of purchasing these components is going up, which is triggering PC prices to also rise, said Lanci, a PC industry veteran. The shortage of components like memory will continue, Lanci said. As component supplies shrink, PC prices will rise, said Mikako Kitagawa, an analyst at Gartner. Moreover, PC makers are raising prices to squeeze more profits out of the shrinking PC market, Kitagawa said.
PC demand is still strong
Of interest, this news has not dented PC demand in the least, which remains strong, though the landscape is shifting. In the early days of the pandemic, when tens of millions of people around the world began working from home, laptop sales surged.
Predictably, that has caused laptop prices to rise steadily over the last several months, and in response to that, users have begun gravitating back to desktops. Unfortunately, the prices of desktops are rising steadily as well, because at the end of the day, they all rely on the same basic set of components. So, the shortages are impacting the whole of the market.
Analyst firm TrendForce predicted SSD prices would go up in the first quarter of this year, continuing a trend from the previous quarters. SSD adoption, as a replacement for hard drives, is growing, but the supply of NAND flash has tightened, which is driving up prices.
The price of DRAM is also going up because of shortages. Memory is a boom-or-bust market and extremely volatile with prices falling drastically when DRAM floods the market. PC DRAM prices went up by 30 percent in the fourth quarter of 2016 compared to the third quarter, TrendForce said in a statement this week. TrendForce is predicting that DRAM prices may increase by up to 40 percent in the first quarter, due to undersupply. The news isn’t any better looking forward.
My perspective
There are still a few scattered deals to be found, but they're getting increasingly rare. The bottom line is whether you're in the market for a new laptop or PC for home use, or you're interested in acquiring new equipment for use in the office as some employees leave their makeshift home offices, you'll almost certainly pay more.
Like Margo Channing said - "Fasten your seatbelts… It's going to be a bumpy night"
By Denis Wilson
Thanks for reading this short post. For more tips on thriving with small business technology, check out the other blog posts at DWPIA Blogs. You can also find me on LinkedIn, Facebook, and Twitter.
I am also a published author and speaker on cloud computing, work@home, and cybersecurity. I work extensively with business and professional associations to provide small business technology education programs.
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