PC prices hold firm in face of component cost declines


PC prices hold firm in face of component cost declines

Microscope contributor
PC prices are holding firm in distribution despite the third consecutive monthly drop in component costs but analysts have forecast significant dowmward movement from the first quarter.

Back in May, the major players raised UK list prices on desktops and notebooks due to the weakening pound/ dollar exchange rate and steady rises in component costs.

However, channel analyst Context pointed out that since the peak in June component costs have fallen month-on-month, for example a 1024 MB DDR3 memory module has declined 20% to £17.

This is due to efficiency gains in the production process but also falling demand for PCs among consumers in the third quarter, as Gartner market stats showed last week.

"PC demand in early Q3 this year has not been quite as strong as the industry was hoping," said Alan Tilanus, vice president for PriceIT at Context.

"What this means for PC components is that in the medium term, we might be facing an oversupply as we move into Q1 2011. This would of course lead to even more significant price cuts," he added.

Andy Gass, managing director at Computer 2000, said forecasting any potential impact was difficult in the current climate.

"Price can be used to drive some market share moves between vendors but it will not drive up the market overall," he said.
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