Business Hardware

PC Sales Up, Prices May Follow. Buy Now?

Rising sales hide what may be a profitless tech recession recovery for PC makers, as customers dive for low-end, low-margin "good enough" PCs.

Still, rising component prices could make now the best time to buy hardware this year.

Researchers IDC and Gartner are out today with PC sales estimates for the final quarter of 2009. The numbers look good, supporting the idea, floated earlier this week that the tech recession is "unofficially over."

Worldwide PC sales, which IDC said grew by 15.2 percent and Gartner by 22.1 percent during the fourth quarter of 2009. For the U.S., the numbers were even rosier, with year-over-year sales up 26.5 percent (Gartner) or 24 percent (IDC). (Here is a story that explains the numbers in more detail than I will here).

But, just as every silver lining must hide a cloud, one lurks behind these numbers, too.

PC manufacturers slashed margins to offer powerful computers at low prices. While the tactic made sense for holding onto market share and encouraged the opening of wallets; it also set a higher expectation of value by customers. That is good news if you're buying, but could put sellers into a jam.

Another complication is the rising cost of PC components, which could sometime this year lead to higher prices, once manufacturers have absorbed all the added costs they are willing or able to.

That could make right now a good time to invest in new hardware, as prices may inch up later in the year.

"Good enough" computers may become the new norm for business purchases.

"Without an effective strategy to convey a clear usage model and feature set tied to each segment, the market will inevitably continue down the slippery slope of good-enough computing sold to the lowest bidder," said IDC analyst Jay Chou in a statement.

I have no research to prove it, but my bet is the Q4 sales surge was driven by consumer spending. Business purchases may lag a bit, but the idea of purchasing "good enough" computers is here to stay.

Many companies purchase more powerful computers than employees really need. If they take a close look at what users do all day, those high-end Dells, HPs, and Lenovos, likely don't justify the added cost.

Today's low-cost consumer PCs often work well as business computers while "real" business computers, which don't need the multimedia whiz-bang popular with consumers, should cost even less. Enterprise IT departments, of course, have different needs, but even they benefit from the tough economy.

It is a buyer's market for PC hardware, which coupled with the introduction of Windows 7 and forthcoming release of Office 2010, makes this is excellent time for businesses to invest in upgraded PC hardware, especially if their users are still on machines purchased with Windows XP.

I've been replacing my PCs; maybe it's time for your company to do so, too.

David Coursey has been writing about technology products and companies for more than 25 years. He tweets as @techinciter and may be contacted via his Web site.

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