Budget Smarter, Secure Better. Starts with Hardware Cost You Can Plan.

October is when many security organizations lock in next year’s budgets. For 2027, those numbers are being set in a market where the hardware underneath them keeps moving. Novaira Insights reports that lead times for memory and high-capacity storage, which used to run four to six weeks, now stretch as long as 52 weeks. It expects buyers to face higher per-device prices and possible specification trade-offs as component costs peak in 2026 and 2027 (SDM Magazine, 2026).

For ISVs, how hardware reaches the customer determines how those price changes land. When it is bought one project at a time, each change arrives as a surprise, and the budget absorbs it by cutting specifications. An ISV that runs its hardware through an OEM program can work out that cost with its partner before the quote goes out.

Supply Goes to the Buyers Who Commit

Memory makers are directing capacity toward AI data centers. TrendForce expects server DRAM contract prices to keep rising each quarter through the second half of 2027, though at a slower pace (TrendForce, 2026b). What gets less attention is who gets served first when supply is short.

Large buyers lock in allocation with long-term agreements and accept higher prices to keep it. Some of those agreements, signed since the second quarter of 2026, now include price ceilings that limit further increases (TrendForce, 2026c). Buyers without commitments get what is left. In the PC market, TrendForce found that OEMs with lower allocation fulfillment rates were forced to buy at higher prices from suppliers or module vendors (TrendForce, 2026a).

An ISV whose hardware is bought project by project, by dozens of customers and resellers acting independently, sits at the far end of that line. Its demand is real, but because it is spread across so many buyers, no one in the chain can commit to it.

Where the Budget Gap Gets Filled

Security budgets are typically approved months before the hardware is ordered. When the quote arrives and the price has moved, the camera count is rarely what gives. Novaira expects customers to look harder at total cost of ownership and to find ways to keep camera counts within fixed budgets (SDM Magazine, 2026). The difference tends to come out of the server.

A recording server specified with less memory than the design called for may run fine on installation day. A year later, the site has added cameras, the analytics are running at peak load, and the server starts falling behind. By then the original cut is hard to trace, and the support call goes to the ISV. Last month we described the proof gap, the distance between what was validated and what a system is actually doing. Budget-driven substitutions are one of the fastest ways that gap opens, because they change the platform after validation, and the ISV rarely hears about it.

Planned Cost Versus Discovered Cost

Discovered cost is what appears when someone prices hardware against a moving market at the moment of purchase. Planned cost is the number an ISV and its OEM partner agree on ahead of time, based on the ISV’s forecast and the partner’s supplier commitments.

The OEM relationship changes where the ISV sits in the supply line. Under OEM-as-a-Service, the partner runs the ISV’s hardware line from design and validation through build and delivery. Because sourcing follows the ISV’s forecast, scattered project demand becomes a program the partner can plan and buy against. That forecast is what supports mid- and long-term supplier agreements and program inventory held for the ISV. Price validity windows then give the sales team a number that holds long enough to close a deal.

Planned cost also covers what happens when a customer’s budget tightens. With alternate configurations validated and approved in advance, a smaller budget lands on a lower-cost option the ISV has already tested.

What Planned Cost Looks Like in Practice

In 2026, an ISV came to BCD specifically to stabilize its hardware cost. Through a mid- to long-term inventory program, its cost holds on a quarterly or semi-annual basis. That stability lets the company publish quarterly price books for its sales teams and set its pricing model on its own schedule, without rewriting it every time a component quote changes.

An engagement we first described in March shows the same principle from the design side. An ISV came to BCD with more than fifty distinct SKU configurations, each built to meet a different customer requirement. Through collaborative engineering and supply chain analysis, the portfolio was consolidated to fewer than twenty configurations while keeping full functional coverage. March looked at what that did for reliability and lifecycle. With prices rising, the cost side of the result stands out more. The consolidation reduced cost exposure and improved margin structure without compromising performance. Concentrating volume in fewer configurations also makes demand easier to forecast.

Secure Better Means Knowing What Is Inside

Budget pressure brings a second risk that is easier to miss. When a lower-cost part is swapped in to hit a number, its origin may not get the same scrutiny as the original.

That scrutiny now reaches further into the bill of materials. In July, the FCC adopted rules extending Covered List restrictions from finished products to logic-bearing hardware components made by Covered List entities (FCC, 2026). A device containing such a component can be refused new equipment authorization if the device would have been barred had that entity built it. The prohibition applies to new authorizations going forward and takes effect October 13, 2026 (Pillsbury Winthrop Shaw Pittman, 2026). ISVs selling into federal and federally funded projects also face their own requirements under NDAA Section 889.

Approving alternates months ahead gives time to review component origin during validation, alongside performance testing.

The Case for Staying Out of Hardware

Many ISVs leave hardware to their customers so they never have to carry it. When each customer buys its own servers, inventory stays off the ISV’s books and no one has to forecast.

A planned program asks the ISV to forecast and to commit to the volume it forecasts. It works best when sales and product teams share a realistic view of demand. The OEM partner takes on the operational work of holding and moving the inventory. The forecasting discipline stays with the ISV.

In this market, leaving hardware to customers has gotten more expensive. The ISV gives up the allocation and price stability that come with committed volume. Its customers absorb price changes through specification cuts that affect how the software performs. For ISVs with steady, repeatable demand, the forecasting commitment is generally the easier cost to carry.

Planning the Platform Along With the Budget

Budget season is a natural moment to look at how hardware cost reaches your customers. The forces pushing memory and storage prices higher sit outside any ISV’s control. When to commit volume, and which alternates to approve before a customer’s budget tightens, are decisions an ISV and its OEM partner can make together.

At BCD, we believe hardware cost belongs in the same planning cycle as the software roadmap, and we build our OEM programs around the ISV’s forecast for that reason.

If your team is setting 2027 pricing and wondering how much of it the hardware market will rewrite, we’re glad to compare notes on how a forecast-based program could hold that number steady.

Hardware. Handled.

References

FCC. (2026, July 22). July 2026 open Commission meeting: Strengthening rules governing dangerous gear (Third Report and Order, ET Docket No. 21-232). Federal Communications Commission. https://www.fcc.gov/July2026

Pillsbury Winthrop Shaw Pittman. (2026). FCC to close another equipment authorization “loophole” and expand e-commerce platform obligations. https://www.pillsburylaw.com/en/news-and-insights/fcc-loophole-e-commerce-platform-obligations.html

SDM Magazine. (2026, August 8). Novaira Insights: Video surveillance market faces faster growth, Chinese reset and 2026 price shock. https://www.sdmmag.com/articles/105694-novaira-insights-video-surveillance-market-faces-faster-growth-chinese-reset-and-2026-price-shock

TrendForce. (2026a, March 31). AI server demand to drive memory contract price increases in 2Q26 as CSPs secure supply via long-term agreements. https://www.trendforce.com/presscenter/news/20260331-12995.html

TrendForce. (2026b, July 9). Long-term agreements cap price increases; server DRAM contract prices expected to rise 13-18% QoQ in 3Q26. https://www.trendforce.com/presscenter/news/20260709-13140.html

TrendForce. (2026c, August 25). Memory prices soar; DRAM and NAND flash to account for 68% of major CSP CapEx in 2027. https://www.trendforce.com/presscenter/news/20260825-13198.html

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