Turbulence in the price of electronics is putting partners in a tight spot, says Billy MacInnes
Blogs
Image: Katerina Holmes via Pexels
Rising prices seem to be a fact of life nowadays. There was a report recently that found the cost of a basket of 25 supermarket staples had increased by 55% between 2022 and 2025. Data released this month from Worldpanel by Numerator revealed grocery inflation rose to 6.8% in the three months to the end of January. Just over a week later, we learned that house prices had increased by 7% in 2025 and the average cost of buying a home in Dublin had reached €500,000.
Against this backdrop of price increases, my eye was caught by a story on the IT Channel Oxygen website concerning moves by IT vendors, specifically HPE and Cisco, to amend their Ts&Cs to allow prices to be adjusted between the order and shipment date.
In the case of HPE, it updated its Ts&Cs to enable price changes “up to the day of shipment” on server and GreenLake orders. Needless to say, those price adjustments are only intended to go one way for the foreseeable future. HPE and Cisco are unlikely to be forging this path on their own for very long.
No prizes for guessing why this is happening: component shortages caused by the huge requirements to support the massive growth in AI infrastructure. You may recall that IDC issued a warning about the effects of the global memory shortage caused by AI on the smartphone and PC markets but it seems the effects are spreading ever wider.
Just a few days ago, stories emerged about the possible delay of Sony’s Playstation 6 until 2028 or 2029 because of those shortages and a possible price increase for the Nintendo Switch 2. Reports also quoted Pua Khein-Seng, CEO of Taiwanese electronics company Phison, predicting the memory shortage would lead to many consumer electronics companies going bankrupt or abandoning product lines this year.
But to return to those changes to Ts&Cs and leaving aside the legality of making price changes right up until the last minute, they do raise some interesting issues for channel partners and their customers. First of all, from a purely positional point of view, if the vendor reserves the right to unilaterally change a contract signed between a channel partner and customer, why bother making the contract between the channel partner and customer? Surely this pretty much takes the contract out of the hands of the channel partner? If you can’t agree a price, what are you there for?
Advisor or antagonist?
Also, what effect does it have on the channel partner’s relationship with the customer if the vendor can undermine any agreement at the very last minute? What happens to the trusted adviser when the customer can’t even trust the adviser on something as basic as price?
Is this an argument for taking pricing out of the partner’s hands altogether? At least that way, the blame and responsibility for price increases falls where it should, on the vendor rather than the channel partner. It’s a bit like dealing with financial advisers. There’s a very clear disclaimer that the value of your investments may go down as well as up. Perhaps a similar disclaimer along the lines of ‘the cost of your purchase may go up before delivery’ would work for the IT industry’s trusted advisers.
Here’s another question: what happens if the customer balks at paying the higher price or if another vendor offers a better price before the original now more expensive shipment has been delivered? Who enforces the original contract? If Ts&Cs include the ability to raise prices “up to the day of shipment” then surely they will need to include a provision enabling customers to cancel the contract based on pricing “up to the day of shipment”?
That could cause absolute mayhem but then, to be fair, the unprecedented spending being committed to buying equipment to fuel the AI boom is already doing that.