PC manufacturers have started exploring workarounds amid ongoing shortages, and one method is likely to target gamers with more money.
The PC Industry Would See a Significant Decline In Budget-Friendly Devices Ahead, Courtesy of Shortages
The PC industry has undergone significant changes in the past few months, primarily driven by shortages all across the supply chain. And when we say changes, we mean rising prices across retail markets and BoM for manufacturers, which means that, to prevent gross margins, certain steps must be taken. And, according to a recent Omdia report, the broader PC industry is now gearing up to shift focus away from budget customers entirely and instead target those ready to spend more on their hardware purchases. The report aligns with what we discussed a few weeks ago, when we disclosed that the entry-level PC segment could 'disappear' in a few years.
These supply constraints are expected to have the greatest impact on the sub-$500 segment, which includes most education and entry-level consumer devices. As thinner margins and lower allocation priority constrain the low-end market, smaller vendors are especially at risk of being squeezed out of the market.
- Omdia
Omdia says that sales growth for PC segments within the $1,300-$1,499 range will be noticeable, whilst the under $500 market could see a decline as drastic as 35 percent. The downtrend in the budget PC segment is mainly due to PC manufacturers' inability to serve these price segments, as rising memory costs, combined with shortages in segments like CPU/GPU, have forced them to focus on products that maintain gross margins. In one way or another, paying attention to budget gamers might become impossible for brands like ASUS or Acer, which could make their prospects gloomy in the future.
The broader PC market is in for a decline in the upcoming quarters, and with CPU shortages mounting as well, manufacturers, as well as vendors, will find it difficult to sustain their business from consumers alone, which is why we have seen a broader shift towards AI as well, by OEMs also acting as server ODMs and finding a way to get their piece of the pie with the AI frenzy. It would be interesting to see how vendors, as well as the PC industry evolves moving ahead, since based on the current trends we are seeing,
About the author: Muhammad Zuhair is a hardware and technology reporter for Wccftech, specializing in the semiconductor industry and the complex interplay between technology, manufacturing, and geopolitics. His coverage focuses on the corporate strategies and technological roadmaps of industry giants like TSMC, NVIDIA, Samsung, and Intel. Zuhair's expertise lies in deconstructing complex topics such as fabrication nodes (e.g., 2nm process), the economic impact of policies like the CHIPS Act, and the strategic development of AI infrastructure from NVIDIA, AMD and Intel.
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