Price of computers and peripheral equipment

Categories : Category Insights | Commodity Trends Published on : Jul 27 2017

The price of computers has fallen steadily since their invention. The steady price fall is caused indirectly by Moore’s Law, an observation that the number of transistors that can be inexpensively placed on a circuit board doubles every two years. As computing capacity grows exponentially each year, manufacturers are able to create more powerful chips using less and less expensive silicon. Due to the highly competitive nature of circuit manufacturing and computer manufacturing, these savings are extended to the consumer every year. However, the decrease in computer prices has steadily decelerated as Moore’s Law approaches its absolute limit. This limit is the production of transistors that are the size of an atom. As this limit is approached, chip development becomes increasingly expensive. As a result, the reduction of computer prices slowed from an average of 8.3% annually from 1998 through 2003 and an average of 7.0% annually for 2004 through 2008. This trend continued over the past five years as low cost manufacturing and competition along with enhanced productivity and introduction of substitute products continued to put downward pressure on the price of computers and peripheral equipment. Over the five years to 2017, IBISWorld anticipated that the price of computers and peripheral equipment will decline at an annualized rate of 3.4%



Forecast

The observed decelerating decline of computer prices is forecast to continue in the five years to 2022. Moore’s Law is not expected to subside in the coming years, and exponentially growing computing capacities will cause these price decreases. In addition, demand for computers will increase as forms of computers are increasingly put in new products like smartphones, but also cars and televisions. Over the five-year period, the price of computers and peripheral equipment is expected to fall at an annualized -2.1%.


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