Further declines in the price of components will lead to further reductions in the price of computers.
Los Angeles, CA (PRWEB) September 24, 2013
The desktop computer procurement market has a buyer power score of 3.8, meaning that buyers have more power in the marketplace than suppliers. The price of desktop computers is in a long-term state of decline. Falling component prices have encouraged manufacturers and retailers to successively try to undercut each other, which is driving down desktop computer prices for buyers. According to IBISWorld estimates, the average selling price of desktop computers has fallen from $692 in 2008 to $458 in 2013, representing an annualized rate of 7.9% per year. Over that same period, the producer price index (PPI) for personal computers, which measures the average change in the selling prices received by producers, fell 13.7% per year on average, says IBISWorld procurement research analyst Dale Schmidt. This trend is forecast to continue through 2016.
“With minimal long-term supply risks and a steady long-term trend of declining prices, it behooves a buyer to purchase desktop computers only when they are needed and to avoid carrying any excess inventory of unused computers,” says Schmidt. “If companies carry excess computer inventory, they risk having overpaid for their inventory compared to the lower future market price for a comparable computer. They also risk sacrificing the improved performance they could receive by buying a better computer at a similar price point later.”
Desktop computer prices are largely determined by their performance specifications and the quality of their components. The price and specifications of computers are extremely commoditized, which reinforces the bargaining power of buyers. There is limited variability in the price of computers with a distinct set of specification; however, suppliers offer a wide range of computers with different specifications, which results in the extensive assortment of product pricing for buyers. Given the ample supply and steady demand, desktop computers exhibit limited price volatility. Price volatility is sensitive to general economic conditions, though, which impacts demand for desktop computers. For example, prices declined significantly in 2009 due to deterioration in global economic conditions. In 2010, prices stabilized due to stronger demand (resulting from improved economic conditions and upgrade activity). High competition and low barriers to entry place downward pressure on desktop computer prices, limiting price volatility in periods of high demand. In such a competitive market, vendors that try to charge higher prices when demand is high will quickly lose market share to competitors that offer similar products for less. This creates favorable pricing conditions for buyers, since they do not risk sudden pricing changes that make it difficult for buyers to determine how much they should pay for desktop computers. It also helps buyers forecast future desktop computer pricing. Current major vendors include Hewlett-Packard, Dell, Apple, Lenovo, Staples and Office Depot. For more information, visit IBISWorld’s Desktop Computers procurement research report page.
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IBISWorld industry Report Key Topics
The report focuses on buying traditional fully featured personal computers, or PCs, used either as a stand-alone computer or as workstations on a network. By definition, personal computers are purchased with all standard peripherals as opposed to a collection of separate components. Suppliers of desktop computers include manufacturers, wholesalers and retailers. This product group specifically excludes laptops, notebooks, tablets, servers and mainframe computers. For the purpose of this report, desktop computers and personal computers will be used interchangeably.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Vendor Financial Benchmarks
Buying Lead Time
Key RFP Elements
Buyer Power Factors
About IBISWorld Inc.
IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.