Don't you bring down PC prices

Intel's announcement of the cunningly named Covington low-price chipset for April delivery has set my mind racing, recalling many conversations with industry figures through the years about why they didn't produce a low-cost PC. Perhaps the most unusual was with Mr Eckhard Pfeiffer, CEO of Compaq Computer and (this is less well known) an expert wedding cake decorator.

Indeed, he has been known to surprise employees at their weddings by bursting out of a five-storey iced confection wearing nothing but his trusty chef's hat and handing the blushing groom or bride a souvenir copy of the next quarter's sales targets.

But I digress. Although I am not married, Pfeiffer and I have a history of sparring over the industry's sales issues. He still chuckles about the time I fearlessly stood up during a results presentation to enquire into Compaq's position on Windows NT, to which Pfeiffer, with engaging presence of mind, riposted: 'Could you repeat that a little louder please?' That's why he's the CEO and the rest of us are merely columnists in trade newspapers.

Several years ago, a group of hacks was invited to accompany Pfeiffer on a wine-soaked tour of his favourite hotel boardroom. As he drained his second half-glass of Chardonnay, Pfeiffer treated us to an amusing and ribald monologue on his favourite subject - how Compaq intends to shave several percentage points off the price of a PC in Europe using advanced logistical techniques. By the third hour, the rest of my colleagues were unable to take the pace and had nodded off, so I seized my chance for an exclusive. 'Do you think there is any demand in Europe for a low-cost PC?' I asked. 'No,' he replied, just like that. I recount this only because Pfeiffer has so far been proved correct.

While the foolish punters in the US mistakenly rush to pay $999 for a new PC (as early as last August, two out of five PCs sold retail in the US were under $1,000), sensible customers in the UK and Europe are still content to pay z999 for roughly the same model. The 40 per cent price difference shows that traditional European buyers are not at a disadvantage, and that the collapse in demand in the retail sector last Christmas was due only to the awfulness of Intel's US advertising.

Which brings us back to Pfeiffer's old adversary - Intel. Just when everything is going so well, why does Intel bring out a chipset that encourages poor people to expect PCs for less than the cost of a family car? This is the thin end of the wedge. If chip manufacturers are encouraged to kowtow to the poverty and disease ridden buyers in Segment Zero, we will soon see an overall lowering of standards.

The horrors of notebook computers without DVD-Rom drives, keyboards without built-in scanners and home PCs without a TV tuner card are too awful to consider. If we are to resist the creeping Americanisation of our computer industry, we should keep European PCs expensive at all costs.

Tim Phillips is a freelance IT journalist.