Despite desktop computer prices falling nearly 24% in the past three years, some computer hardware prices are expected to rise through 2017. According to a new report from IBISWorld, programmable logic controllers, graphics and accelerator cards, network switches, and intercom systems will increase in price in the next three years. Although hardware production costs have decreased due to a 1.7% average annual dip in semiconductor prices and new technology, such as automated manufacturing processes, IBISWorld recommends that buyers consider acquiring related products as early as possible to avoid future price increases.
Programmable logic controllers (PLC) are computers that control and automate industrial processes or machines. Sales of these products are connected to industrial output and the amount of private investment put into computers and software. The report projects industrial output to increase at an annualized rate of 3.4% through 2017, while private investment will grow at an annualized rate of 5.7%. The high upfront capital requirements and competition is expected to slow supplier entry into the market. In addition to demand growing, PLC prices will grow at an average of 4.2% per year between now and 2017. The report advises buyers to purchase as early as possible and bundle for a potential discount. Additionally, digital logic systems (DLS) may offer a less expensive alternative to PLCs.
Graphics and video accelerator cards (graphic cards) are attachments used to process high-definition images and videos on personal computers. They have applications in video/gaming for consumers and are used by advertising teams to control images and videos for advertisements. IBISWorld projects the current percentage of households with one computer will grow from 80% to 84% between now and 2017, with advertising expenditures rising at an annualized rate of1.6%. Due to high demand, graphic card prices are projected to grow at an annualized rate of 2.6% through 2017. Although it is hard to avoid price growth in a market with such high demand, IBISWorld recommends buyers make purchases early.
Network switches manage the correspondence between computers, servers, printers, and other devices on a computer network. The report projects that the number of broadband internet connections in the U.S. will grow at an annualized rate of 4.3%, while the number of employees is expected to increase at an average rate of 1.7% per year. Additionally, private investments in computers and computer software are forecasted to grow at an annualized rate of 5.7% through 2017. Due to these factors, network switch prices are projected by IBISWorld to rise an average of 2.7% per year in the next three years. The report offers advice for buyers to bundle related goods, seek less expensive technologies, and look to smaller players in the market. Top-tier vendors, making up over 75% of the market, control considerable pricing power.
Intercom systems are expected to steadily increase, the report shows, especially in nonresidential construction—which is projected to rise 6.3% per year. Increased research and development (R&D) costs and demand will push prices up at an annualized rate of 2.7% through 2017. The report recommends early attainment and long-term contracts to combat rising prices. However, innovation is superficial and will become sluggish when the intercom systems become outdated. Despite price deflation for most computer products, hardware prices continue to rise. Buyers looking for hardware not mentioned should look for trends as indicators of eventual price growth. Buying sooner than later and exploring opportunities for bundling related products and services can help alleviate rising costs.