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Currency devaluation crippling consumers as vendors prepare to raise PC prices

Currency devaluation crippling consumers as vendors prepare to raise PC prices

Device vendors will have to raise the prices of PCs to offset the effects of currency devaluation.

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

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

“We are currently seeing the sharp appreciation of the dollar against most other currencies reflected in companies' earnings results," says Ranjit Atwal, research director, Gartner.

“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.”

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

“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,” Atwal adds.

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

Consumer Behaviour

In mature markets, PC sales are determined by price and, through 2016, Gartner expects that 30 percent of PC consumers will buy down the price curve.

Gartner analysts also expect the following behaviours amongst PC consumers:

• Price-driven consumers (of PCs priced at less than US$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 US$500 to US$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 US$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.

Business Behaviour

In 2015, 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.

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

“n addition, purchases of optical drives and optional accessories will disappear.

“While we expect large organisations 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.”

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