Spend Matters welcomes this guest post from IHS.
Average selling prices (ASPs) in all categories of computers are expected to slip over the next several years, even as the qualities of the computers continues to rise – faster processors, more memory, more storage. ASPs for personal computers including desktops, laptops and entry-level servers are expected to average a 0.7% drop in 2014 and 2015, while enterprise servers are forecast to decline 1.9% each year on average during that period. Tablets, as well, are expected to see significant deterioration, averaging 6.1% declines over those years.
This follows persistent price declines for computers over the recent past. For 2013, ASPs for computers overall declined 1.7%. ASPs have experienced some upward pressure from input cost increases periodically, but computer manufacturers are loath to pass along intermediate goods price escalation. Rather, manufacturers tend to hold prices steady and vary the content, for example installing less or slower DRAM or utilizing slower hard disk drives (HDDs), as input costs fluctuate.
Regarding input costs, price deflation for HDDs will see declines of 0.9% per year in 2014 and 2015. ASPs for hard disk drives fell far faster last year, 6.9%, but were coming off inflated levels in 2012 due to supply shortages in the first half of that year. As well, solid state drives (SSDs) are becoming an increasingly attractive alternative to HDDs, particularly for mobile PCs. In 2014, 1 in 5 laptops will ship with a SSD installed, and that number will only continue to rise. NAND memory, the basis for SSDs, has been coming down in price per gigabyte as the subspace becomes increasingly competitive. In 2014 and 2015, the ASP for SSDs is expected to fall 3.3% annually.
One key input, DRAM, will see approximately stabile prices over the next 12 months, in contrast to recent history. The component saw strong price escalation in 2013 that gradually unwound in 2014. For the year in 2013, the IHS spot DRAM ASP rose 88.1%. In the first half of the year, price increases were due to the drawdown in inflated inventories; production reallocation to other, higher-demand products such as NAND; and consolidation within the sector. More recently, a fire in one of SK Hynix's plants led to shortages and a resurgence in price escalation. Despite the rapid growth, prices remained at a reasonable level, around $2/chip, and did not provide much impetus for finished goods manufacturers to raise prices. At this point, the sector is back to a normal state of affairs, and likewise, prices have receded. In 2014 to date, the IHS spot DRAM ASP has fallen more than 5% and for the balance of this year plus next will maintain its current moderate level.