How far will PC prices fall?

Competitive pressures will keep PC prices heading downwards in the near future, but there's some difference of opinion among vendors on how much they will fall. Recent price decreases have been variously explained by vendors as a reaction to lower component prices, particularly from Intel, and to direct vendors such as Dell.

Competitive pressures will keep PC prices heading downwards in the near future, but there’s some difference of opinion among vendors on how much they will fall.

Recent price decreases have been variously explained by vendors as a reaction to lower component prices, particularly from Intel, and to direct vendors such as Dell.

Compaq announced reduced prices across the Asia-Pacific region last month by up to 15%. The new Presario range was introduced with a price of just $2199 (including GST) at the bottom end. Compaq spokesman Tony Lambert believes there will continue to be “dramatic changes” in both the technology and the price in the consumer market, but expects the commercial market will see changes at a more steady pace.

Dell also announced price reductions last month across its entire product range, including cuts of up to 12% from its line of network-ready OptiPlex corporate desktop PCs.

Dell marketing manager Robert Small says Dell cuts prices by 5% to 8% every month, passing price cuts straight on from suppliers to the consumer. He says it will continue to make those cuts.

Hewlett-Packard cut prices last month by up to 24% across its line of Vectra corporate PCs. HP PC marketing manager Joanna Burgess says she doesn’t expect further Intel price drops for a few months. While competition also affects prices, she doesn’t expect to see any large PC price changes for at least another three months.

However, she and other vendors expect to see a “shake-up” in the Pentium range which could affect prices.

IBM commercial desktop manager Douglas Pearless expects prices will continue to track downwards because of competitive pressures.

“There are a large number of people trying to get their section of pie, so prices will drop, but maybe not as steeply.”

He believes there won’t be more significant falls until Intel’s next lot of processor price changes.

PC Direct announced up to 20% savings on its new desktop systems last month. Product development manager Richard Moss says ultimately prices will continue to fall, but that prices traditionally stabilise in the lead-up to Christmas.

“Most major multinationals start building their stock for Christmas now and don’t want price drops happening in that time. As far as changes, there’s nothing too drastic in the mass-market PC coming up for a little while yet.”

Newcomer Gateway 2000 has not finalised its New Zealand pricing yet, but in Australia its 2000 GP-Series ranges from $A1585 (for a Pentium-200 with 6Mb of SDRAM, 512Kb pipelined burst cache, 1.6GB Ultra ATA hard drive and 15in NI SVGA colour monitor) to $A3588 (ex tax). Its multimedia systems range from $A2080 to $A4349 (ex tax).

Gateway 2000 managing director Peter Lees says the price wars have become a natural part of the industry, particularly because of component price drops.

“Companies such as Gateway are driving those price drops from our suppliers through to the market place faster than ASAP, because of the direct model.”

PC Direct’s Moss says PC Direct will be keeping an eye on Gateway. “It is another competitor for us, even more so with them being direct.” He believes there is a trend for the bigger players to get stronger and smaller players to drop off the bottom unless they have a niche market.

Digital also announced cuts of up to 12% last month.

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