Entry-level PCs and budget phones could disappear from the market because of rising memory costs according to an analyst company. Gartner forecasts a drop in phone shipments of 8 percent this year, with PC shipments down 10 percent.

The company bases this on expectations of a 130% rise in the cost of DRAM (used for temporary memory storage) and SSDs (used for permanent storage). That would build on dramatic costs in memory in the past year, with some becoming four times as expensive in a short period.

The cost hike is technically down to a supply shortage, but the underlying issue is rising demand for memory and storage in fields other than PCs and phones. The shortage in the device market is caused by manufacturers commanding much higher prices from buyers who want to use the memory in infrastructure such as data centers. In particular, it's being used by AI (artificial intelligence) companies who are trying to scale up and aren't necessarily prioritizing profits. (Source: indiatimes.com)

17% PC Price Hike

While memory is only part of a tech device, it's an important contributor to cost. Gartner crunched the numbers and reckons it would mean a 17% rise in the price of PCs and a 13% rise in smartphone costs.

The company believes this wouldn't simply be a case of higher costs slowing down sales. Instead it thinks it could spell the end of a key market sector: the budget PC where manufacturers try to use cheaper components and lower specifications to keep prices under $500. (Source: theregister.com)

Green Boost

That approach might simply become unviable and prices would have to rise enough that some potential buyers won't be able to afford a PC at all, while others will decide it's better to wait longer and save up for a higher-spec model.

It might be good news for environment lovers as Garner expects consumers to hold on to devices for longer, with PC lifespans rising 20 percent.

Gartner is also forecasting that sales could be lower than expected because consumers haven't really gone for dedicated "AI" computers that include a specific powerful processor known as a neural processing unit. These include those carrying Microsoft's Copilot+ label.

The End of the Sub-$500 Era of PCs

Industry analysts now suggest the entry-level PC segment is under existential threat. Gartner data indicates that memory costs are projected to peak at 23% of the total bill-of-materials for a standard PC this year, up from 16% just a year ago.

This shift is making the "sub-$500" laptop nearly impossible to manufacture without significant losses. As a result, many brands are beginning to abandon the budget space entirely to protect their overall profitability, potentially leaving students and low-income users with fewer options for new hardware.

Why "Refurbished" is the New "Budget"

With the primary market for low-cost devices drying up, a major shift is occurring in consumer behavior. For the first time, the secondary and refurbished laptop market is moving into the mainstream.

Entry-level smartphone buyers are currently exiting the new-device market five times faster than premium buyers. Instead of purchasing a new "basic" phone that has been stripped of features to keep costs down, many consumers are choosing to buy three-year-old flagship models that offer better performance for the same price.

The AI Adoption Paradox

There is a distinct irony in the current market: while AI demand is driving up the cost of budget PCs, those same high costs are slowing down the adoption of "AI PCs." Because dedicated AI computers (like Copilot+ models) require a minimum of 16GB of RAM to function effectively, their prices remain firmly in the premium bracket.

Gartner has subsequently pushed back its projection for when AI PCs will hit 50% market penetration from 2026 to 2028. Most consumers have not yet found a "must-have" reason to pay a 17% price premium for local AI processing.

Security vs. Sustainability

While the 20 percent increase in PC lifespans is a win for the environment, it presents a new challenge: "Security Debt." As users hold onto devices longer, a higher percentage of the global PC fleet will be running on aging hardware that may lack the latest chip-level security protections found in newer models. (Source: gartner.com)

What's Your Opinion?

How would big price prices for PCs and phones affect you? Have you delayed buying a new device over cost concerns? Is it a bad thing if people hold on to devices for longer?