PC component prices on the upswing

PC component prices on the upswing

Summary: When Apple reported its most recent quarter it toned down its outlook based on an expected rise in component prices.Apparently that expected rise is right on schedule.

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TOPICS: Apple, Hardware
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When Apple reported its most recent quarter it toned down its outlook based on an expected rise in component prices.

Apparently that expected rise is right on schedule.

In a research note on Monday, Pacific Crest Securities analyst Andy Hargreaves outlined the following price increases:

  • In July, 2GB, 4GB and 8GB flash spot prices rose about $2.92, $3.29 and $1.17 respectively. This jump is expected to crimp iPod and iPhone profit margins.
  • LCD panel prices increase 8 percent in July. This is expected to ding Mac profit margins.

He also noted that the component price increases are expected and that Apple should be able to offset them with strong demand.

But why just focus on Apple? Both HP and Dell have benefited from component costs. As these costs increase profit margins could slip. But if things go as planned and second half boost in demand should allay any worries.

Topics: Apple, Hardware

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  • Answer:

    "But why just focus on Apple? Both HP and Dell have benefited from component costs. As these costs increase profit margins could slip. But if things go as planned and second half boost in demand should allay any worries."

    Simple... HP and Dell, in their competition, pass on savings to the consumer. When has Apple ever done that? The price of an iPod is exactly what it was last year. Whereas, HP and Dell computers tend to fluctuate according to cost of manufacture.

    So analysts are more keenly interested in Apple's profit margin because Apple isn't going to raise nor cut prices. So its much easier to analyze profitability for them.
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