Editorial - Intel's pot calls Dixons' kettle black
Tis the season to be nasty, tra-la-la la-la ... The spirit of Christmas is once again absent from the UK IT industry. Backbiting, not cheer, is the order of the day, with Dixons, that small high street operation, being slammed for allegedly charging too much for PCs.
Anyone who has ever bought kit at Dixons would know that this is obviously a fabrication and that the group only has the consumer's best interests at heart. That Intel made the accusation means you have the right to choke with surprise, suppress loud laughter or conjure up a well-known phrase involving the words pot, kettle and black.
Craig Barratt, chief executive at Intel, lashed out at the recent Comdex show claiming the Dixons group 'charges ridiculous prices'. Since then, Labour powerbroker Peter Mandelson has been involved and referred the entire matter to the Office of Fair Trading.
Whatever the outcome of the OFT's investigation, the issue of high PC pricing is fact, not fiction, and there is more than one culprit. Earlier this summer, researchers at Inteco found UK buyers were paying more for PCs than their French and German cousins.
And now, even more PC misery is on the way. Research from IDC is pointing to a slowdown in the corporate and consumer take-up of cutting-edge technologies. This is not good for the channel or the high street - especially when companies like Intel produce more chips than McCain, forcing PC vendors to constantly produce faster and fluffier models.
IDC has now found that buyers across the board are - wait for it - perfectly happy with lower-end systems. This is great news for Cyrix and, to a lesser extent, AMD, who are finally beginning to take charge of the very low-end arena. Intel's Celery chip - sorry, Celeron - has so far failed to budge them from the cheap slot. Cyrix will be hoping to cash in on the new Scrooge mentality, while Intel will keep hammering away at Dixons' sales model claiming that it's charging too much for big systems, thus hurting big margins.
Despite the manic pace of PC development, corporates are asking for slow and methodical technology migrations to control costs. This is slowing the adoption of the latest technologies - that is, products with the highest margins.
IDC goes on to say that the most successful products in the near future will focus less on multimedia frills and videoconferencing, and more on technology enhancements such as faster CPUs and larger hard drives, while using lower-end graphics and audio to keep prices down. All very sensible.
With a recession supposedly looming, this trend towards less is more may run into next year. This is especially true for the corporate sector where cash is being squirreled away for next year's rainy days. There might even be a resurgence of the doomed network computer, well known for its anorexic margins.
Maybe it's time for PC resellers to turn in their 'Men Love Big PCs' hats for the 'Small is Sensible' alternative - at least in the short term.
Most likely, the Big PC brigade will be back in full swing next year claiming the bigger your PC, the bigger your ... cheque book.