PC price fights fluster channel

The latest round of price sparring between Compaq and Dell is wreaking havoc with margins

The channel has blamed the latest wave of price-cutting activity on the struggle between Dell and Compaq for supremacy of the PC market.

Last week there were announcements of price reductions on notebooks and desktops from Compaq, Toshiba, Acer and Fujitsu, among others. In the US, Hewlett Packard and Digital have announced hefty price cuts, and are expected to follow suit shortly in Europe.

Some vendors have been attacked by the channel for not maintaining dealer margins. Fujitsu has said that in the face of its second drop in prices this year, it will be guaranteeing margin to the dealer community. Frank O?Brien, Fujitsu sales director, said Compaq had damaged its reputation in the channel.

?This couldn?t have come at a better time for me. Fujitsu is gunning for Compaq and now we can offer the channel better margins. I hope Compaq keeps this up.?

One Compaq reseller described this round of price fights as an example of indirect vendors running scared from those that sell direct. ?No one wants to drop prices if they can avoid it,? he said.

?Dell has been increasing the pressure on prices for some time, the indirect vendors are panicked by this and are now competing on price. When Compaq hears that Dell is to reduce its prices, it gets in first with a well publicised price-cutting campaign. Everyone else then falls in line.?

The first three months of the year is the top selling season for corporate and public sector dealers. Traditionally there has been no need to cut prices during the period. But downward price pressure from the US is playing havoc with UK dealer bottom lines.