As price wars heat up, the victors seem to be customers

Article Abstract:

Heated competition in the microcomputer industry has led to rapidly falling prices that will benefit customers in the short term, but many observers expect that the resulting drop in profit margins will cause marginal manufacturers and dealers to go out of business. No well-known vendors have yet shown signs of folding, but some firms are struggling; Northgate Computer Inc was recently bought out by Everex Systems, and high-volume clone vendor Packard-Bell recently canceled an initial public offering. Compaq has led the most recent price war, introducing two new lines of low-cost computers intended to compete directly against low-margin machines already sold at rock-bottom prices. Other vendors quickly responded with steep price cuts of their own. IBM has not yet responded, although officials admit that the computer giant will have to take action. It recently announced the formation of two wholly-owned subsidiaries in Europe and Canada to produce low-cost clones for sale in those regions under the name 'Ambra.' Senior IBM officials privately say that IBM has dramatically cut its manufacturing costs and is now able to make PS/1 and PS/2 computers as inexpensively as any other vendor. Compaq is an example of a vendor that has drastically changed its pricing strategy; it positioned itself throughout the 1980s as a vendor of high-quality, premium-priced machines sold through a rigid dealer channel, but has now lowered prices and broadened its distribution network.

Prices and rates, End users, Price cutting, User Need, Competition

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PC buyers will soon face choices among work stations: the technology is tempting; the investment is formidable

Article Abstract:

The line between microcomputers and workstations continues to blur. In 1993, Intel Corp is expected to introduce its Pentium microprocessor, and Microsoft Corp will introduce its Windows NT operating system, which is designed to use powerful chips such as Pentium. At the same time as microcomputer performance is approaching workstation levels, workstation prices are falling, so that low-end workstations now sell for less than $5,000, which places these products in competition with high-end microcomputers. Companies planning to manufacture low-cost machines include Sun Microsystems Inc, DEC and Silicon Graphics Inc. Most businesses are not likely to switch immediately to workstations because they already have heavy investments in software for their PCs. Microcomputer makers will counter new work stations with powerful reduced instruction set computing (RISC) systems. Novell Inc, which recently acquired Unix Systems Laboratories Inc, will champion the Unix operating system in competition with Windows NT. IBM offers a low-end RS/6000 workstation for $3,995, but this price does not include a disk drive.

Electronic computers, Purchasing, Buyers Guide, Workstations (Computers), Workstations, Purchases, Trends, Industry Analysis, Outlook, Hardware Selection, Guidelines

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