Are you planning to buy a Personal Computer in the near future? Wondering about PC prices as Dell, HP, and Lenovo plans to increase it’s prices?
Find out why you need to buy it NOW before global prices rise.
So far, Lenovo, Dell and HP are seeing no slowdown in PC demand.
PC prices are likely to move higher in the second quarter and rest of 2021 as vendors pass along higher component and logistics costs amid strong demand.
If earnings from HP, Dell Technologies and Lenovo are any indication, inflation is likely coming to the PC market in a perfect storm. Cisco already foreshadowed inflation for data center infrastructure.
For PC market inflation the moving parts go like this:
Demand for laptops has surged amid remote work and education and a new normal for work is emerging. Whatever the new normal turns out to be PC demand appears to be strong.
- There’s a global chip shortage, but other components are in short supply. IDC cited a bevy of other components beyond CPUs that are hampering production.
- PC vendors manage their supply chains well, but executives noted that they will pass along higher costs.
- Lenovo, HP and Dell Technologies all reported strong financial results and said demand wasn’t slowing. In addition, tech buyers haven’t altered their behavior based on higher prices or supply chain delays.
Here’s a tour of how PC leaders see the supply and demand balance playing out in 2021.
PC prices as Dell HP and Lenovo set to rise, see below…
CFO Thomas Sweet made it clear that inflation was hitting the business. He said:
“The supply situation has not kept up with the demand environment as we think about the need for semiconductors. And that’s an industry-wide issue, and clearly an issue that the technology industry is dealing with.”
“We do expect the component costs are inflationary in Q2 and probably are going to be inflationary in the second half. And that’s principally coming out of displays, DRAMs and NAND.”
“We will price that inflation — that input cost to increase as appropriate. And we’ll watch to see if there’s any impact on demand. And that’s really the framework we’re going to have to work our way through as we go through the year.”
Sweet added that Dell hasn’t seen customers adjust configurations to manage costs yet.
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HP is seeing pricing power in printing as well as PCs. Marie Myers, CFO of HP, said demand is strong. She said:
“It’s just all about demand outpacing supply and really creating that favorable environment. So, it’s basically just the laws of supply and demand, which helped us with better pricing in the quarter. Regardless of whether you’re sort of talking year-on-year or quarter-on-quarter, that improvement in gross margin was primarily driven by favorable pricing, which showed up as fewer promotions and as cost improvements.”
HP CEO Enrique Lores said hybrid work is driving PC demand as CIOs invest in devices to keep employees productive.
“We expect to continue to see very strong demand for PCs in the coming quarters. And this strong demand is what is creating the component shortages. We have provided strong guidance today both for the quarter and for the year. And this is based on the visibility that we have today for components. If we get more components, we could do even better.”
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Gianfranco Lanci, chief operating officer of Lenovo, said inventory in the channel at record lows of 2 or 3 weeks. Inventory is usually at 6 to 8 weeks. Inventory is low in all of Lenovo’s key regions. Lanci also addressed pricing. He said:
“Pricing is slowly going up. And in order to maintain the profitability we need we continue to watch pricing. We want to be competitive of course, but pricing is slowly going up. I think we’ll continue to go up for the next 3 or 4 quarters because of the component cost trend.”
Lanci added that demand so far is strong enough to absorb price increases. Lanci projected that shortages of various components are likely to continue in the next 12 to 18 months.
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Bottom line: It remains to be seen how price increases will be handled by consumers. There’s already a bit of a shift to desktops as notebook shortages take a toll. At some point, demand will be impacted by shortages and price increases.
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