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Record dollar fails to drive prices down

Record dollar fails to drive prices down

The rise of the Australian dollar to $US0.90 is being heralded as a major plus for local consumers, but don't expect a red line to be slashed through product price tags tomorrow, several industry representatives claim.

The Australian dollar hit a 23-year high against the US greenback last week. It represents a jump of over 10 per cent over the past six months. Despite the better exchange rate, Dicker Data sales manager, Chris Price, claimed vendors had kept pricepoints up. However, he predicted prices could be adjusted in the longer term if the dollar held onto its record-breaking position.

"We've been sitting around $US0.82-$US0.85 for a while, but hitting $US0.90 is fairly new, so it's wait and see," he said. "For a vendor, if you lower prices, your competitor lowers their price, which only gives short-term gains. "There will be a correction at some point, because vendors have to have worldwide equivalency on their product. Otherwise they're promoting unhealthy activity in the market. And vendors will correct this locally if they feel threatened."

Price suggested vendors had instead chosen to launch new incentive programs to attract consumers. "Vendors have a bigger marketing kitty [through the improved Australian dollar] to target new customers or to switch from other vendors," he said. "The stronger dollar gives them much more flexibility for rebates and programs."

Plus Corporation managing director, Nigel Fernandes, also reported vendor prices remained constant. "There's been a drop on memory and video cards, but everything else is the same price at the moment," he said. "I don't think we'll see it affected for a while." EMC general manager of commercial and channel sales, David Henderson, played down the impact of the strong Australian dollar, claiming most of the major vendors set local pricing using a strict timetable and locked in dollar value.

Another factor which determined the cost of goods was how much hedging and forecasting vendors operated on, he said.

EMC sets its price lists on a quarterly basis. "It's going to have a ripple effect, rather than be a tsunami," Henderson said. "Everybody plans in blocks of time. We could see a difference in pricing over the next six months, but you also have to take into consideration the technology advancements and feature sets you're getting.

"From where we sit, we look at how competitive we are in the Australian marketplace, and our pricing is competitive right now. If our dollar does continue to stack up though, customers will see either better value or lower prices."

Similarly, HP personal systems group manager for commercial products, Rob Kingston, said its pricing decisions were based on the competitive landscape. While there was no movement yet, he predicted product prices could fall in the next month or two.


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