View all newsletters
Receive our newsletter - data, insights and analysis delivered to you
  1. Technology
July 25, 1994

VICIOUS PRICE WAR IS LOOMING IN PERSONAL COMPUTERS

By CBR Staff Writer

It begins to look as if we’re heading for a repeat of the period in the mid-1980s when there were 30 or more personal computer manufacturers saying they’d each be happy with 10% of the market – and ramping manufacturing volumes accordingly. The one item left over from IBM Corp’s second quarter review is that finance chief Jerome York told analysts that IBM has now sold or written off $480m of $600m of personal computers left over from last year but previously undisclosed. During the first and second quarters this year, IBM cut prices on everything apart from ThinkPads and took some already reserved write-downs. He attributed the oversupply problem to miscalculations and confusion by customers over the proliferation of brands in IBM’s armoury – but that is largely in the past. Now the industry is bracing itself for a fierce price war this autumn, which could be exacerbated by users holding off from buying in anticipation of much lower prices and the Wall Street Journal forecasts that multimedia machines equipped with CD-ROM players and stereo sound will sell for less than $1,000, with high-end 80486 machines selling for as little as $750. Demand in the US is expected to rise only 12% this year, compared with 27% last year, but some majors are building 50% more machines than a year ago. Compaq Computer Corp’s inventory soared to equal 90% of its revenue in the second quarter, up from 63% a quarter earlier. Intel Corp’s need to fend off the clonemakers means that it will be slashing Pentium chip prices to commodity levels, but the scenario is very bad for almost everyone except users, since the customer will find that complex work can be done much more cheaply on a personal computer than on the workstation he was planning to buy, and it will be difficult to charge a big premium for machines based on chips other than the iAPX-86. It makes things particularly hard for IBM’s Power Personal Systems division, which has already designed the first PowerPC desktops, and will have designed them to a price point much higher than the one likely to prevail when they finally ship. Equally, a higher proportion of servers will be iAPX-86-based than would otherwise have been the case, making the Intel-with-everything strategies of AT&T Global Information Solutions and Unisys Corp look very far-sighted indeed. Caught in the middle will be all the distributors and retailers.

Content from our partners
Rethinking cloud: challenging assumptions, learning lessons
DTX Manchester welcomes leading tech talent from across the region and beyond
The hidden complexities of deploying AI in your business

Websites in our network
Select and enter your corporate email address Tech Monitor's research, insight and analysis examines the frontiers of digital transformation to help tech leaders navigate the future. Our Changelog newsletter delivers our best work to your inbox every week.
  • CIO
  • CTO
  • CISO
  • CSO
  • CFO
  • CDO
  • CEO
  • Architect Founder
  • MD
  • Director
  • Manager
  • Other
Visit our privacy policy for more information about our services, how Progressive Media Investments may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.
THANK YOU