Despite worldwide PC shipments totalling 71.6 million units in Q2 2021, compared with this time last year, year-on-year growth has decelerated.
According to Gartner’s latest worldwide PC shipment forecast, this lagging growth is due in part to the impact of ongoing component shortages – namely computer chips, among many other things, making the sector operate in reduced supply.
In the past four years, a series of cross-industry components shortages have resulted in several missed delivery dates from all manufacturers. And for those who work in the sector, it is a well-known fact that the PC industry runs on “just-in-time” supply chains, and any minor disruption on this can have a major impact on deliveries.
This brewing crisis was further exacerbated over the last 18 months, as the pandemic significantly disrupted supply chains and logistics providers – through sporadic closures of factories due to Covid infections, reduced shipping channels and limited use of air cargo.
This left many businesses looking to purchase PCs frustrated, as the global semiconductor shortage and component supply constraints have extended the lead time for some enterprise PC models – and, inevitably, driving PC prices to an all-time high.
The question many organisations might be wondering is how can we purchase enterprise PCs during a global chip shortage? The solution – outsmart the crisis.
Yet to outsmart the crisis, IT infrastructure and operations leaders must understand the current landscape they are operating under.
Industry-wide shortage of key components
Currently, the PC industry is facing myriad component shortages. While the small chip semiconductor shortage has by far had the most significant impact worldwide – given that these are used for the most basic functionality in just about every device, from PCs and displays to appliances and automobiles (and cost as little as 50 cents) – it’s not the only one.
Unfortunately, other key components, including DRAM memory, flash memory and controllers for solid-state drives, 14-inch and 15-inch display panels and display driver ICs, non-optical sensors used in touchscreens, power management chips, Wi-Fi chips, to name a few – have also faced a shortfall in supply, according to suppliers across the industry.
Consequently, customers placing large orders with any PC manufacturer are reporting turnaround times that are two to four months longer than usual. For larger PC orders, the wait can be up to 90 to 120-day delivery time. And this doesn’t even include PC accessories, such as PC monitors, webcams and docking stations, which have also been seriously impacted.
PC prices have soared across the industry. And while the shortage has had an impact, other factors at every step of the supply chain have also inflated PC prices – including the price increase in raw materials that make up these machines, such as iron ore and aluminium. All of this, coupled with the pandemic as a backdrop with its own impact on logistics and shipment costs, made PC prices skyrocket.
This led to many PC manufacturers passing through some of these increases in prices to customers through contract clauses, ultimately leaving organisations with receipts 5% to 8% higher for typical corporate laptops, and up to a staggering 35% on some non-standard models and configurations.
Outsmarting the crisis
To reduce waiting time for delivery, organisations should focus on standardising models and ordering a higher volume. By checking with suppliers to determine what models will be easier and faster to get, or what kind of minor adjustments and configurations could improve delivery times, organisations will be able to reduce some of the time lag between the ordering date and delivery date.
Although prices won’t return to normal anytime soon (according to Gartner, price stability won’t return until mid-2022), to reduce costs of higher PCs, businesses should look to downgrade their processor, DRAM and solid-state drive (SSD) capacity. To avoid compromising efficiency and ensure the PC meets the satisfactory user needs for the next three to five years, enterprises should speak to suppliers to find the best affordable model that supports the user experience.
Finally, thinking smart means better planning. The only real hedge against these issues is to build a realistic procurement plan, with reasonably accurate demand forecasts that look out at least two and possibly three quarters in advance. Better planning and forecasting means better communication between businesses and their suppliers. Outlining these forecasts to suppliers can help improve the odds of getting machinery when required.
Also, finding alternative suppliers can help address minor mishaps in supply and act as buffers should there be a need to plug an immediate PC shortage within the business. However, this can also create an added burden around ongoing support and operations for IT organisations.
Buying a PC or, for the matter, any enterprise device that has a chip embedded in it, will come with its hurdles – and this won’t go away anytime soon. Businesses won’t solve the chip shortage crisis, but they can think smart about how they go about mitigating the impact it is having on their PC procurement strategy.
Autumn Stanish is a principal research analyst at Gartner.