A flood of low-cost and "free" PCs, which are being sold separately or bundled with multiyear Internet-access contracts, is creating a shortage of 14- and 15-inch monitors, which are a staple of small and midsize businesses.
As a result, those businesses, along with consumers, are being forced to push upstream. And while there are sufficient quantities of 17-inch monitors now, even those are likely to become increasingly scarce by next year because there isn't enough global manufacturing capacity.
The problem is truly one of worldly proportions. These so-called free PCs-which generally require a $400 Internet contract--are so popular that they're driving up demand for attached monitors in the United States and Latin America, in both the business and the consumer markets. Monitor makers expect the same trend to sweep through Europe and Asia next year. And when that happens, there likely will be supply problems.
"Capacity utilization is more than 92 percent right now," says Marc McConnaughey, VP of technology and sourcing at ViewSonic. "There are plenty of 17-inch monitors available at this point. But going forward, there's going to be a shortage of 14-, 15- and 17-inch monitors."
Given the current manufacturing utilization rate, McConnaughey says, available capacity will be sucked dry by next year if the market continues growing by even 10 percent, which he says has been the global average for the past several years. This year, in contrast, it grew by 14 percent due to the free-PC model, and growth in the U.S. market was even higher.
That state of affairs also could create competition for 17-inch monitors inside corporations. While small and midsize businesses tend to buy 14-inch and 15-inch monitors, most corporations now buy 17-inch models.
At a time when PC-system prices are crashing, a shortage in those monitors potentially could drive selling prices upward. Businesses will have to choose larger-and more expensive-monitors, or flat-panel displays, if they want immediate availability.
The average selling-price difference between 15-inch and 17-inch monitors is about $75, and it's about $125 to jump from 14-inch to 17-inch monitors. The difference between a 15-inch monitor and a 15-inch flat panel is more like $600, however.
Couple that with a shortage of memory chips resulting from the recent Taiwan earthquake, and the PC industry has cause for concern. "We haven't seen a price rise yet," says Matt Sargent. But it's too early to tell what's going to happen, he adds.
Anyone want to place a bet?