Currency devaluation set to trigger 10% price hike on PCs, says 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'

PC vendors will have to raise their prices to offset the effects of currency devaluation, according to Gartner.

The analyst firm said prices of PCs in the Eurozone and Japan, in particular, will increase by up to 10% this year.

‘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.’

>See also: ‘Collapse’ of tablet market will continue in 2015, says Gartner

In 2015, Gartner estimates that end-user spending in constant dollars in Western Europe will reach $116 billion, a 4% increase over 2014. This increase reflects the expected price increases in local currency.

Total device end-user spending in constant dollars, Western Europe (millions)

2013 2014 2015 2016 2017 End-user spending 110,551 111,572 116,086 117,381 113,864

‘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 consumers will buy down the price curve.

Gartner analysts also expect price-driven consumers of PCs priced 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.

Meanwhile, value-driven consumers of PCs priced between $500 and $800 will delay purchases due to rising prices. This segment is expected to be 40% of the market.

And feature-driven consumers of PCs priced 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.

>See also: Gartner's Internet of Things predictions

Business behaviour

The price hike will also impact large businesses, which 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%) 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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