PC prices are falling so steadily that IT research firm IDC believes some people might hold off from purchasing until next year, in order to get more bang for their buck.
IDC NZ manager Graham Penn says next year will see the rollout of Memphis (the Windows 95 successor). He also says features outlined by Microsoft and Intel earlier this year — in their guide to the features and design changes for the PC platform for the next two years — will start rolling into products next year.
Penn says that in the Christmas lead-up last year many people, aware of the imminent arrival of MMX technology, didn’t buy.
“We could see the same thing happening again. If you do not have to buy this year — say, it’s a good idea but the budget is a little tight — leave it another six months and you’ll get a whole lot more hardware for your price.”
He says it could be a problem for the channel if it doesn’t clear stock bought for Christmas. The supply chain logistics will be a critical issue. “You can’t afford to drop the ball at any stage.”
However, Dr Des Dass, managing director of Intel distributor Electronic Resources NZ, says although you will get more for the same price if you wait a few months, that is always the case because of the rate at which technology moves.
He says it makes sense to buy when companies like Intel have some “serious price drops” such as they have had recently, but there will be further quarterly price drops.
Penn expects processor prices to -continue to fall due to pressure on Intel from AMD and Cyrix. He believes mainstream PC vendors will respond to the direct vendor challenge by driving volumes up and prices down in order to keep their production lines operating at full capacity. “In addition to that, the major vendors are moving to channel configuration or build-to-order models.”
Penn says another reason for pressure on prices is that vendors are increasingly micro-segmenting the market (building a product for particular market segments), which lowers costs. He says while many factors put prices under a lot of pressure, vendors and the channel have an interest in keeping the average prices up.
“The channel only gets its percentage margin. If price points go from $3000 to $2000, even if the margin stays the same, they get fewer dollars per unit. It’s not necessarily a case of ‘Let’s get prices down and everyone’s happy’. They’d rather sell more boxes at $3000 than at $2000.”
Penn warns that if the New Zealand dollar continues to fall, PC prices will not go down.
“All the components coming into New Zealand are generally priced in US dollars. If the New Zealand dollar falls against the US dollar, the base price rises. If you think the NZ dollar is going to go through the floor then you’d better buy now.”
IDC expects New Zealand PC shipments for the second quarter of this year to be 8% to 9% up on Q2 last year. PC shipments for Q1 this year were up 4% on Q1 last year.