Dollar's fall hikes midrange prices

Price rises are on the way for buyers of midrange systems. Solnet has indicated to its New Zealand customers that the price of Sun computers is likely to rise by 10% in July and Hewlett-Packard has also targeted July for price increases of between 5 and 10%. Data General and IBM say they are watching the rate closely.

Price rises are on the way for buyers of midrange systems.

Solnet has indicated to its New Zealand customers that the price of Sun computers is likely to rise by 10% in July. "We've signalled a likely price increase because of the way the dollar has fallen," says managing director Murray McNae. "However, if the dollar climbs back we may not need to increase prices."

Hewlett-Packard has also targeted July for price increases. Managing director Bob Cattell says he suspects there will be an across-the-board price rise of 5% to10%.

Data General has taken a different tack, reviewing its prices consistently over the past year, once a quarter. General manager Robert Lee says the dollar has dropped in value by about 25% against the US dollar over the period. "We're still absorbing about 7% to 8% of the currency difference," he says. That's because of a need to stay competitive while no one is sure whether the dollar will fall further or rise.

IBM referred Computerworld to IBM Australia, which says only that it is watching the exchange rate closely.

Several vendors say the good news for them is that customers are buying strongly now rather than wait for potential price hikes.

Meanwhile, PC hardware prices are holding steady but users must be wondering for how long.

IDC New Zealand general manager Dinesh Kumar says once vendors have sold existing stock, if the dollar remains low prices will go up. For the month of July at least vendors are promising to hold prices steady.

Joanna Burgess, Hewlett-Packard's PC products marketing manager, says she hopes to hold prices steady in July. "There has been pressure to put PC and server prices up on July 1 on PCs. We won't be having the price drop that we would have normally expected so I guess they will stay where they are. Some may even come down."

Compaq marketing manager Tony Lambert says Compaq is about to announce price reductions on some entry-level servers.

"Most prices will hold but some will reduce. The cost of products continues to decrease anyway and if the dollar wasn't dropping prices here would be coming down faster."

It's a similar story from IBM, according to John Boyd, marketing manager for the personal systems group for Australia and New Zealand.

"We don't have any plans to increase prices. It would be true to say that the deterioration in the exchange rate has had an impact on us. The improvements in price-performance and manufacturing that would normally lead to price decreases will not pass on those benefits."

Asked how long IBM can keep the price steady, Boyd says it all depends on the exchange rate. "We watch it very closely."

Dell is not affected by the price of the Kiwi dollar against the greenback, says mana-ging director Ross Allen.

"This is because a lot of our costs emanate from Malaysia. A lot of the cost of the dollar falling against the US currency is offset by virtue of our position and currency of manufacture, so it's not an issue for Dell.

"Our customers are not having to stampede to buy because our prices might go up."

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