Downward spiralling hardware prices, which have introduced millions of new customers to the PC industry, could grind to a halt in the second half of this year, in the opinion of many vendors and distributors contacted by ARN last week.
After sustained devaluation, the Australian dollar plummeted to another 12-year low a fortnight ago when it could only buy $US0.58. It recovered somewhat to the low-60 cents range by the weekend but is still in the order of 20 per cent lower than 12 months ago.
In the "vast majority of cases" Hewlett-Packard's long-term hedging policy - supporting channel sales in Australian dollars - absorbs the exchange rate crisis according to Chris Greig, HP's sales and marketing manager, commercial channel organisation. However Greig did add that "the reality is, people have got to expect prices to go up on certain products".
Lexmark's business printer product manager, Ian Clohessy, said its pricing structure permits "some" fluctuation while assembling mainstream networking products locally is claimed to give it extra security. "You will see upward moves on the price of low-cost volume items like consumables, but we haven't had to put up printer prices yet," he said.
David Finn, managing director at Lexmark rival Kyocera, said the exchange rate has had an effect, but it is not passing losses onto channel partners. "Our solution is to absorb the price rises by getting our overheads down," said Finn. "We can absorb that for at least another quarter."
John Boyd, marketing manager, personal systems group at IBM, said Big Blue has no plans for PC prices to increase at this time. "We obviously watch the exchange rate very closely and it would be true to say price reductions enjoyed recently will be reduced in light of what has happened," he said.
High turnover, regularly importing distributors are doing it a bit tougher. "It is obviously impacting on our resellers with prices changing daily. It is more difficult for them and us to conduct business," said Fiona Stewart, public relations manager at distributor Tech Pacific.