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PC big shots prepare for a price war

All the PC veterans - HCL, Vintron, Samtron, Hewlett Packard and Compaq - have declared war, slashing prices in a bid to enter a few more homes.

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Because that is where the action is - small offices and homes, or SOHO, a segment tipped to grow phenomenally.

According to a study by the IDC group, sales to SOHO will jump from about 130,000 PCs this year to a staggering 640,000 next year.

The surest way to prise open a few more homes is to lower prices. And that's precisely what these companies are doing.

Prices have already been slashed between 25 and 30 per cent.

"Intel has introduced power processors and hard disk drives targeted at the home segment and the end customer can now get computers for about Rs 10,000 less than what they would have spent about six months back," says Sharad Talwar, general manager HCL Infosystems Limited.

Says Rakesh Kapoor, managing director of Summit Data Products, distributor of Apple Computers, "You can now get a branded computer with multimedia, MMX, colour monitor, fax modem and Internet card for Rs 38,000 to Rs 40,000. The same computer was priced at Rs 45,000 to Rs 50,000 depending on the brand."

Samtron's base model is now available for Rs 35,000. HP has also slashed its prices and its base model is available for Rs 40,000. HCL's base model is available for only Rs 31,000.

However, a difference of Rs 20,000 to Rs 25,000 will remain between Indian and foreign branded computers. "The foreign brand offers a three-year warranty while Indian brands provide only one-year warranty for their products. However, other components are same in both the brands," says an HCL distributor.

One major reason why PCs are making bigger inroads into homes is the easy availability of Internet, coupled with the fact that Videsh Sanchar Nigam Limited has slashed Net rates.

Besides, there are now the private ISPs. This has enlarged the potential market, say analysts. If prices were to come down, then there's a whole lot of people who would buy PCs. This is temptation enough for the companies to lower prices and target volumes.

But all this price-cutting is likely to knock the bottom out of a grey market that has had to take quite a few nasty knocks in the past. First, they are unlikely to match the features and quality of branded PCs, and second, they now lose the only advantage they had - the price.

- Compiled from the Indian media

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