Price rises will hit PC demand

Gartner has warned that spending on PCs, tablets and mobile phones will be hit by price rises resulting from vendors reacting to exchange rates

Price rises in the PC market forced by vendors trying to claw back margins lost as a result of the position of the dollar in the global currency markets will have an impact on demand.

In the past few weeks it has become clear that because of the strength of the dollar vendors are going to have to introduce some price rises to get back lost revenue, with HP's CEO among those referring to plans to take those steps in recent financial results.

But with the PC market starting to stutter after a fairly good 2014 the timing of the increased prices is going to add another factor, along with the Windows XP upgrade slowing down, to reasons why the hardware category is going to suffer in the short-term.

The warning around the exchange rate impact on device spending, which includes PCs, tablets and mobile phones, came from Gartner, which is predicting a 7.2% decline in spending this year.

"The fall in PC purchases is primarily due to expected price increases by vendors in Europe and other regions, which is forced by local currency depreciation against the dollar," said Ranjit Atwal, research director at Gartner.

"The currency squeeze is forcing PC vendors to increase their prices in order to remain profitable and, as result, it is suppressing purchases. We expect businesses will delay purchases of new PCs, and consumers will delay or 'de-feature' their purchases. However, this reduction in purchasing is not a downturn, it is a reshaping of the market driven by currency," he added.

There had already been signs that phones were more popular with consumers than both tablets and PCs and the analyst house expects that situation will continue throughout this year.

"Following rapid growth, the current mature consumer installed base for tablets is comparable to that of notebooks," said said Roberta Cozza, research director at Gartner.

"Not only is the tablet segment nearing saturation in mature markets, but the influx of hybrids and phablets will compete directly with tablets in emerging markets," she added.

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