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PC pricing heats up

by Dan Briody

SAN MATEO -- Despite talk of lowering the total cost of PC ownership, driving down PC prices remains a priority for most vendors, according to recent announcements by Hewlett-Packard and Compaq.

HP has declared a new distribution initiative in the US called TopValue, which is part of its Extended Solutions partners programs. The aim of the new program is to "slash costs" of the company's fastest selling models. The initiative will take advantage of new electronic links with distributors to anticipate customer needs in the channel.

The program includes 17 different models in the HP Brio small-business, Kayak workstation, and Vectra commercial PC lines. Eventually, the TopValue program will be expanded to include the HP NetServer and OmniBook notebook lines.

Meanwhile, Compaq has lowered the price of its DeskPro commercial desktops by as much as 18 per cent in the US, leaving the company with five models now priced at less than $US1000. Like HP, Compaq is attributing the cost savings to enhancements in its supply model, particularly the build-to-order system put into place last year.

For example, the DeskPro 2000 SBE with a 200MHz Pentium MMX processor, a 16-speed CD-ROM drive, a 2.4GB SMART II-compliant Ultra ATA hard drive, S3 enhanced 64-bit graphics with 1MB synchronous graphics RAM, and a monitor, is priced at $US1679.

Microsoft moves against resellers

By IDG staff writers

SAN MATEO -- At the end of last month, Microsoft sued resellers in Boston, northern California, and New York for allegedly installing and selling unlicensed software.

The charges stemmed from the company's campaign to fight software piracy. Three computer resellers in Boston were sued, along with six California resellers and three in New York. In California, five of the six companies had previously settled with Microsoft on similar charges.

"Resellers are realising that distributing illegal software is not a fight they're going to win in a court of law," said Jim Lowe, corporate attorney at Microsoft.

The cases involved alleged illegal copies of Windows 95, Office 97, Windows 3.1 and MS-DOS.

The software giant stepped up its efforts to fight pirated software last year, with the creation of a hotline and e-mail address.

OEMs say when chips are down, AMD favours IBM, Compaqby James NiccolaiSAN FRANCISCO -- While Advanced Micro Devices (AMD) wrestles with production woes in its K6 processor line, smaller PC makers complain they are feeling the brunt of AMD's inability to meet demand for the chips.

Sources at US companies Everex and CyberMax Computer have complained that AMD gives preferential treatment to its larger customers -- namely Compaq and IBM -- when it is unable to meet demand for the K6.

"We don't think they treat us as an important customer so we're not very happy with this. We complained to their high-level people, but we didn't get a very satisfactory response," said a manager at Everex, who asked not to be identified.

CyberMax recently stated it has been forced to delay shipment of its K6-based laptops because of repeated delivery delays from AMD. The company's order for portable 233MHz K6 chips, expected in December, was first pushed back to January and is now expected to arrive in the second quarter, CyberMax said.

According to the Cybermax statement, AMD told CyberMax it used all its mobile K6 chips to meet orders from Compaq and IBM.

CyberMax suspects the orders delivered to Compaq and IBM were placed after its own order and, like Everex, it accused AMD of giving preferential treatment to the larger companies.

Playing favourites?

An AMD spokesman acknowledged the firm had failed to meet orders from desktop manufacturers, and said it must sometimes choose who to deliver a limited supply of chips to.

"When more people want it than you can provide it for, you have to do what you think is right and fair, and it's never a nice position to be in," he said.

Filipino PC dealers suffer from currency crisisby Melba-Jean ValdezMANILA -- Players in the Philippines' PC industry expect a 20 to 30 per cent decrease in sales as a direct result of the peso's continued weakening against the US dollar.

Jimmy Go, managing director of Microcircuits Systems International, a distributor for Datamini Computers and Compaq, said he expects his company's PC sales to drop by 20 per cent or more for the first quarter of 1998.

"I can't say how big the decline in the orders is," said Go. "It may be the holiday rush or the shock about this issue that's hindering them from ordering. It's still too early to tell."

However, he expects a reversal of 1997, where sales for the first and second quarters were excellent. This year, Go is hoping for a third and fourth quarter recovery.

Jose Ramos, executive vice president for marketing at Columbia Technologies, a dealer for Acer Group's PCs, said that in the second half of last year, sales were larger compared to the same period in 1996. However, he said PC sales this year will be tough.

"It's possible that if this keeps on going, expect a 30 per cent decline in the industry's growth for the first quarter," said Ramos. He added that Columbia will have to wait for the new Acer prices before knowing what the impact will be on his business. "I'll be happy if I can break even," he said.

Better PC service ranks high on buyers' listsby Dan BriodySAN MATEO -- As PCs increasingly become commodities and vendors struggle to define themselves in the marketplace, services and support have become the new battleground.

Compaq's bid to acquire Digital demonstrates how PC vendors are scrambling to bring in qualified service and support specialists, extend their offerings, and broaden their field organisations to obtain highly lucrative corporate contracts.

"This Compaq/Digital deal is part of a huge wave of consolidation that we are in the middle of," says Roger Kay, a PC market analyst at IDC. "This moves Compaq out of the box vendor category, opposite Dell, and puts them in the enterprise league."

This means Compaq will join the likes of IBM and Hewlett-Packard which already offer hardware and software consulting services.

IBM is working on a triage system for its nine worldwide call centres, routing the calls to specialists according to the type of problem.

Toshiba starts build-to-order notebook PC salesby Rob GuthTOKYO -- Toshiba will begin selling its high-end notebook PCs on a build-to-order (BTO) basis from April this year, according to the head of the company's international PC business.

The move into BTO makes Toshiba some-thing of a latecomer to the group of leading computer vendors which have already added direct sales programs, such as BTO or con- figure-to-order, to their traditional PC sales methods.

Toshiba will kick off the service in the US with the Tecra notebooks and high-end models from its Satellite portables range. The company may follow up with desktop PC sales later in the year, according to Fumio Yamashita, senior manager, PC division, international operations for Toshiba.

Locally, any plans for a BTO plant to be established in Australia are being evaluated, according to local officials.

"It's premature to say whether we can set up a BTO site in Australia but we are currently evaluating our options," a Toshiba spokesperson said.

"If a BTO plant goes ahead it may only be made available to select corporate customers."

Intel settles Cyrix patent infringement disputeby Elinor MillsSAN FRANCISCO -- Intel has settled patent infringement litigation with Cyrix by extending a patent cross-licensing agreement Intel has had since 1976 with National Semiconductor, Cyrix's parent company.

The settlement, which dismissed a patent infringement lawsuit Cyrix filed against Intel in May 1997, allows the companies to develop microprocessors using each other's technology without fear of being sued for patent infringement.

"The settlement covers any tech-nology that's covered by patents" at either of the companies, said National Semiconductor spokesman Alan Bernheimer.

Bernheimer would not specify exactly what National Semiconductor and Cyrix plan to do with Intel technology under the extended agreement.


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