PC prices look set to plummet

PC prices look set to plummet
Tom Foremski PC prices are set to fall even lower as industry leaders Compaq Computer and IBM try to shift hundreds of thousands of unsold PCs. Compaq warned recently of lower first quarter sales and said it will cut prices to move large inventories of unsold PCs prior to the introduction of more powerful and low end microprocessors from Intel. Industry analysts estimate that Compaq has unsold inventories of more than 200,000 PCs, while IBM has 46,000 PCs. Speaking at last week’s Internet World trade show in Los Angeles, Hewlett-Packard CEO Lew Platt said that a PC price war is imminent. He said that although Hewlett-Packard had kept supplies in line with demand, Compaq and IBM will be forced to cut prices which will affect Hewlett-Packard and other PC vendors. “The low end market has really taken off, which has caused problems for Compaq and others,” said senior industry analyst Kim Brown at US market research firm Dataquest, adding: “For a while, everybody was chasing the performance gap, but now PCs are fast enough to run Windows applications, there is less need for more powerful PCs.” US market research firm Computer Intelligence says that the average PC price has fallen to below $1,300, compared with $1,600 a year ago. This will be $1,150 by the year end.


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