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Supply issues driving the price of business hardware through the roof

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Margin mugging, a practice whereby businesses purchase products with heavily inflated margins, was rampant in the IT industry last year, a report from managed IT services firm Probrand suggests.

As reported by The Register (opens in new tab), the firm analyzed $6.6 million worth of hardware bought by businesses in the three months before the pandemic, as well as the rest of 2020. It found that the mean average margin rose to 50.84 percent during the pandemic, up from 9.4 percent in the quarter before.

Probrand says the spike in margins was due to Covid-19 shaking up the entire supply chain, and tilting the trade scale heavily towards the demand side. The lockdown forced many hardware factories in China to temporarily shut down their operations, as well as many planes to remain on the ground. 

At the same time, businesses all over the world were looking to buy additional hardware in order to facilitate remote working and maintain business continuity. This increase in demand, together with the decrease in supply, inflated the prices.

There were many examples of margin mugging, Probrand says, with a Kingston Technology MicroSD card being among the most extreme. It was bought at a trade price of $3.36 and sold to a construction company for $22.24.

Market analysts are expecting the hardware shortage to continue for the remained of the year, with prices falling back to normal in 2022.

Sead Fadilpašić is a freelance tech writer and journalist with more than 17 years experience writing technology-focussed news, blogs, whitepapers, reviews, and ebooks. And his work has featured in online media outlets from all over the world, including Al Jazeera Balkans (where he was a Multimedia Journalist), Crypto News, TechRadar Pro, and IT Pro Portal, where he has written news and features for over five years. Sead's experience also includes writing for inbound marketing, where he creates technology-based content for clients from London to Singapore. Sead is a HubSpot-certified content creator.