TBR
FOR IMMEDIATE RELEASE
A premium PC profit squeeze is imminent as memory prices climb and ASPs decline
HAMPTON, N.H. (April 18, 2017) — Even as the premium PC boom helps rejuvenate sales of PCs
globally, gross margin and gross profit erosion is looming for most vendors, according to Technology
Business Research, Inc.’s (TBR) 4Q16 Devices and Platforms Benchmark. TBR forecasts a combination of
unfavorable supply chain conditions and competition headwinds will force most PC vendors to endure
gross margin declines that exceed several hundred basis points year-to-year, and PC gross profits could
evaporate by as much as 10% or more year-to-year for some vendors.
“With PC vendors intent on maximizing upfront profit per sale, rising memory chip prices will further tax
vendors’ already stressed supply chain and manufacturing operations,” said TBR Internet of Things and
Devices Senior Analyst Jack Narcotta. “PC vendors must optimize cost of goods sold and offset the
thinner gross margins that accompany the lower average selling prices (ASPs) needed to compete
against a crowded roster of premium PC competitors.”
According to the benchmark, success in premium PC markets helped fuel gains for leading vendors in
TBR’s devices ecosystem. Consumer notebook PCs drove devices revenue growth for vendors such as HP
Inc. and Dell Technologies, enabling those companies to protect their gross margins despite pricing
pressures from a greater number of competitors.
However, despite possessing potent assets such as larger scale and clear sales and marketing strategies,
premium PC vendors will grapple with shrinking profit per sale that risks offsetting the benefits of
gaining PC market share. With a greater number of PC competitors entering the premium PC space —
and with smartphone vendors such as Huawei beginning to test the premium PC waters — leading PC
vendors may find themselves soon engaged in a price war, further pressuring PC profits and margins and
altering the competitive landscape.
TBR’s Devices and Platforms Benchmark examines the trends in PC, mobile and connected device
markets and highlights leaders and laggards in each segment. The benchmark covers 17 device vendors,
providing insight into leading vendors’ strategies; laggards’ competitive positions and outlooks; and
market sizing of PCs and PC services, smartphones, tablets, connected devices and virtual reality.
For additional information about this research or to arrange a one-on-one analyst briefing, please
contact Nigel Taylor at +1 603.758.1803 or [email protected].
ABOUT TBR
Technology Business Research, Inc. is a leading independent technology market research and consulting firm
specializing in the business and financial analyses of hardware, software, professional services, and telecom
vendors and operators. Serving a global clientele, TBR provides timely and actionable market research and
business intelligence in a format that is uniquely tailored to clients’ needs. Our analysts are available to address
client-specific issues further or information needs on an inquiry or proprietary consulting basis.
TBR has been empowering corporate decision makers since 1996. For more information please visit www.tbri.com.
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