Growing pains: Low-cost PC makers have come on strong but difficulties loom: some upstarts face problems with quality, service, returned merchandise; a threat of rising overhead
Article Abstract:
After a period of unprecedented growth, mail and discount store distributors of low-priced microcomputer clones are beginning to face a range of problems. While the mass- and direct-marketing segment of the computer industry continued to grow, posting revenue growth of 20 percent in FY 1991's flat market, major vendors such as Northgate Computer Corp and Gateway 2000 Inc are now experiencing difficulties on two fronts. On the one hand, major microcomputer manufacturers such as IBM, Tandy Corp and Compaq Computer Corp are responding to declining market shares by lowering overhead and reducing the prices of low-end products. Of even greater concern to the mail order challengers are a combination of administrative overload, alleged decline in the quality of products, a lack of working capital and the challenges posed by a new tier of vendors selling microcomputer products at even lower prices.
Publication Name: The Wall Street Journal Western Edition
Subject: Business, general
ISSN: 0193-2241
Year: 1992
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PC giants' price war hurts tiny makers
Article Abstract:
The price war among the large microcomputer manufacturers such as IBM and Compaq Computer Corp is threatening small, unknown microcomputer companies with extinction, but many such companies are responding with flexible marketing programs. Analysts predict that about half of the smaller companies may be forced out of business soon, and that, as a result, the price war may end and prices will rise again. Small companies are able to buy standard parts from a volatile spot market, but they have the disadvantages of small inventories and vulnerability to shifts in the component market. These companies have responded to pressures with lily pad marketing strategies, meaning extreme flexibility. Some find market niches for themselves; some diversify into new markets, such as mail order; and some sell microcomputers manufactured by industry giants.
Publication Name: The Wall Street Journal Western Edition
Subject: Business, general
ISSN: 0193-2241
Year: 1992
User Contributions:
Comment about this article or add new information about this topic:
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