“If a bid price is not firm until shipment, it undermines confidence in competitive tendering”
Yolanta Gill, CEO, European Electronique
Some of the big hardware vendors are now reserving the right to adjust pricing on orders up to the point of shipment. Have you seen anything like this before, and how big a disruption is this to the way the channel usually operates?
We saw similar pricing instability during the COVID-19 supply chain crisis when component shortages and logistics volatility forced vendors to shorten quote validity. However, reserving the formal right to adjust pricing at the point of shipment marks a more fundamental, structural shift in the vendor-partner relationship.
The channel depends on price certainty, particularly within fixed-term and public sector contracts where budgets are approved months in advance and post-PO price increases are often legally impossible. We are already seeing concerns around procurement integrity – if a bid price is not firm until shipment, it undermines confidence in competitive tendering.
To mitigate the risk the channel has increased forward purchasing, holding buffer stock to protect customer pricing. The situation is further exacerbated by vendors advising partners to get ahead of the AI-driven queue. This triggers panic-buying and artificial inventory buffers distort true demand, driving prices even higher.
Sustainable supply chains require risk to be shared proportionately. Shifting this volatility downstream effectively asks partners to underwrite the gap between a fixed customer budget and a floating vendor price. Long-term the market will need to find a new commercial equilibrium.
Given the shortages are being caused by AI data centres, to what extent do you have sympathy with vendors who are having to tweak their Ts and Cs?
The scale of infrastructure being deployed to support AI workloads is unprecedented, and it is reshaping global demand for silicon, GPUs, memory, power capacity and associated hardware. We recognise that vendors are facing genuine supply allocation pressures.
However, any adjustment to Ts & Cs needs to balance supply-side realities with the need for predictability across the channel. Channel partners operate under rigid contractual commitments, particularly within public sector, and fixed-price framework agreements where retrospective price hikes are not just difficult to absorb; they are often legally impossible to pass on. The market therefore needs to find a way forward to navigate these challenges.
What will be the knock-on effect, for instance in terms of favouring alternative vendors, cloud-based solutions or second-user equipment?
If price volatility persists, we are likely to see customers diversify vendors, accelerate adoption of cloud and consumption models, and increase interest in refurbished equipment where pricing and lead times are more stable. Second-user equipment and certified refurbished solutions provide shorter lead times and more predictable pricing, particularly for non-cutting-edge workloads. Ultimately, the market will gravitate towards solutions that offer transparency and commercial certainty.
Convergent’s Jody Pawson weighs in on next page…
