Low dollar hikes IT costs

Users face networking and PC price hikes following the slump in the New Zealand dollar.

Users face networking and PC price hikes following the slump in the New Zealand dollar.

Network equipment prices are rising about 5%, thanks to the dollar hovering around US 43 cents.

While some distributors have increased prices already, Auckland networking distributor Express Data are raising them this month after having held off in August.

Auckland University, which is rewiring its campus, has been caught out by the price increase.

Technology director Nevil Brownlee says the high-end switching cost for part of the project will increase 5%, an added cost which could have been avoided if the university had placed its order three weeks earlier.

Accident Compensation Corporation is negotiating to buy several hundred PCs but might consider delaying the purchase in the hope that the dollar goes up again. But it’s a strategy with pros and cons, says ACC general manager of business technology Henry Carr.

“If you’re a large organisation you generally replace a third of your infrastructure each year. If you hold off doing that for too long you start seeing effects on your business performance and productivity. You might save some money but it could be very difficult to catch up.”

Multinational PC vendors such as Compaq, Hewlett-Packard and Dell are holding steady on pricing but will review the situation if the dollar continues at its current level or dips lower.

Having raised prices in July, HP has hedged currency and doesn’t expect a change until October 1 - if at all, says HP marketing manager Joanna Burgess.

Dell New Zealand manager Ross Allen says the PC maker will hold steady on prices but review its position in mid-September.

Compaq finance director Bruce McEwen says the exchange rate is one variable among the many which dictate price, though at this stage he doesn’t see prices changing dramatically.

But many local PC assemblers, hit by an increase in the cost of components from overseas, say price rises are inevitable.

Lance Primrose, managing director of Auckland’s Arche Technologies, expects a 9% to 10% increase at retail level.

“However, some of the pricing won’t be as bad because there was an Intel CPU price drop last week and AMD had one earlier. That will weaken the blow a little bit.”

Graham Dunn, a director of Auckland-based Samcor Computers, says there’s no way local manufacturers can withstand the rise in the cost of components.

“This is probably the worst I’ve seen in 15 years. I think we’ll see price rises of 3% to 10% depending on the product - PC or server - over the next quarter leading up to Christmas.”

Christchurch-based Cyclone Computers supplies directly to the education and corporate market. Although component suppliers warned of a 3% to 5% price rise, Cyclone won’t raise prices for up to three weeks, says general manager Richard Morgan.

The PC maker has bought US dollars to cover itself on major contracts which might be affected by a further fall in exchange rate.

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