UPDATED 07:06 EST / MAY 01 2015

NEWS

Gartner: Enterprises to hold off on PC purchases; higher prices to blame

The PC market has been feeling the pinch for a few years, and things are likely to get tougher as vendors are forced to raise their prices by as much as 10 percent this year, due to the impact of the strong dollar on profits.

That forecast from Gartner, Inc. will have a ripple effect as more businesses decide to hold onto their older systems, impacting PC sales even further, the analyst firm said.

Gartner’s report was primarily concerned with mature markets such as Western Europe and Japan, where the strength of the dollar is already impinging on corporate profits.

“Device vendors will mitigate the impact of their declining ‘dollarized’ 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,” wrote Ranjit Atwal, research director at Gartner. “However, vendors’ margins will fall, even as they shift their shipment focus to the regions least affected by these currency effects.”

Gartner reckons higher PC prices will deter large numbers of both consumers and enterprises from buying new systems, though some will simply opt for less expensive systems with fewer features. The largest enterprises will reduce PC purchases by up to 20 percent, Gartner said.

“Large organizations 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 wrote. “In addition, purchases of optical drives and optional accessories will disappear.”

The forecast pours more doom and gloom onto an already depressed PC market that’s been struggling for the last four years. Sales fell sharply between 2011 and 2013 as consumers opted to buy tablets and smartphones instead. The decline was reversed last year, mainly due to Microsoft’s decision to end support for Windows XP, which forced thousands of businesses to refresh their systems. But that replacement cycle has now largely ended, and sales have begun to decline again.

The slump has hit both PC and component makers, with companies like Hewlett-Packard Co., Intel Corp., and Advanced Micro Devices, Inc. all seeing profit margins decline.

Gartner also looked at the impact on consumers, saying higher prices would cause 30 percent of PC buyers to purchase less expensive computers (at $500 or less), while another 40 percent would likely delay their purchases.

Photo Credit: wizzer2801 via Compfight cc

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