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. Must read:
Global chip shortages, supply chain woes leading to tech infrastructure inflationThe global chip shortage is a much bigger problem than everyone realised. And it will go on for longer, tooThe impact of the global chip shortage continues to ripple across the tech supply chainDeveloper burn-out and a global chip shortage: The IoT is facing a perfect storm
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. 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. Sweet added that Dell hasn’t seen customers adjust configurations to manage costs yet. 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. Click the red button below to view Dell’s latest deals. HP CEO Enrique Lores said hybrid work is driving PC demand as CIOs invest in devices to keep employees productive. Click the red button below to view HP’s latest deals. 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. Click the red button below to view Lenovo’s latest deals. The big wild card is whether the prospect of higher prices actually pushes demand forward.
