Why are computers so expensive in 2018?


We haven’t posted in our busy 2018 yet, but there has been a question popping up quite a bit of late when we have been quoting new computers for our clients. Why do computers seem so much more expensive than they were a year ago?

No, you aren’t imagining it. Desktop computers and laptops in particular are seeing higher prices these days and there are two main reasons for it that are completely out of purchasers controls.

Memory and video cards.

Memory affects any computing device of course and it has seen prices more than double since 2016. In June of 2016, 16GB of high-speed DDR4 RAM was available for as low as $70 (US). Flash forward to January 2018 and that same RAM now costs over $200 (US). Factor in the fluctuations in the Canadian dollar and you can see how the prices have been hard to predict.

The reasons for the jumps aren’t simple to explain, as they run from the increased demand in RAM for smartphones taking up production to a scale back on PC RAM manufacturing facilities on sales downturns around 2015. This was back when you found headlines predicting the death of the PC with the rise of the tablet. Go figure, that didn’t happen (with tablet sales actually way down) and the market hasn’t yet corrected for the manufacturing. Unfortunately, a correction isn’t expected until the end of 2018 at the earliest, which means almost all systems are seeing up charges based on RAM costs. This hits whether you are looking at custom builds or prepackaged “white box” systems. You might find a bit of a break on some older white box systems that were shipped before the prices rose, but you would be looking at systems well over a year old already and we don’t recommend those new.

On top of this comes the extraordinary situation facing the supply of video cards. Now for most business users this shouldn’t be a major issue. The average small business user can usually get by using the onboard video that ships with most computer systems. These can handle the simplest of duties, but if you’ve recently discovered the increased efficiency of using dual monitors or require more power for your rendering, you are in for some major sticker shock. Prices on video cards, even at the lowest ends have sky rocketed since December 2017.

The reason comes down to one thing. Cypto currencies, with Bitcoin being the most obvious. Trying to understand the connection between video cards and bitcoins is complex, but to keep it simple, they are essential for “mining” the coins that have such volatile prices. At the beginning of January 2018, prices for one bitcoin could be around $15,000 on any given day. Since then they have cratered down to around $6,000 per coin. That pricing generated a frenzy that has had people buying video cards at every price point. This has driven prices through the roof.

As an example, before Christmas, we had someone buy a Nvidia Geforce 1050TI video card for around $250. In mid-January, that same card was selling online for over $400. That card is in the low to mid range for video cards. Higher end cards that were normally $600 were going for upwards of $1500.

As you can imagine this has caused major issues with supply and demand for the parts and anyone needing a computer with more than the most basic needs is paying a hefty premium for it.

We’ve been having to discuss this in-depth with clients who are needing new systems, not out of a want, but out of pure business need. They are rightfully shocked at the increase in price of even basic systems. So the next question becomes, what do they do?

It always comes down to your budget, your needs and your timing. If you need something immediately it’s a good time to consider the refurbished market where you can get systems off lease at decent pricing. These tend to be anywhere from one to three years old and have been re-certified. The downside to those is that they are one to three years old. They are old tech, come with a very short warranty and they won’t have the lifespan of a new system. They might be able to hold you over until prices come down though.

If you would rather stick with new (which is always the best option) then you have to weigh your current need with the prospect of waiting. Memory prices won’t be changing for a while with trends continuing as they are, and even when new supply arrives it will take a while for prices to reflect that.

Video cards needed for mid to high range systems are a bit trickier. There is already a market correction taking place with bitcoins and the like, but it will probably take a few months for those cards to come back down to near normal retail pricing. Unfortunately, it means you are stuck with those higher prices if you must get something new now.

There are ways that you can refresh an older system for much cheaper, including a refresh of the operating system and the install of a new solid state drive. If you have questions, concerns or want to discuss such an upgrade, feel free to contact us. This market is a confusing one for anyone and its our job to keep up with it to advise you as best we can.

 

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