HEADLINES
JOBS
COM:PORT
POLICY POLICE
ARCHIVES

Rupee trouble to push up PC prices

Almost all major PC manufacturers are contemplating a hike anywhere between 3 and 8 per cent.

While the hike may not come into effect immediately, it is likely to happen in about a month. Already companies such as Tata IBM, Digital

T O D A Y

• The Berlin Wall • PC prices to rise • Tata IBM-Vedika deal • VSNL board revamp

Equipment India Limited and Zenith Computers Limited, have started working towards effecting a price hike.

However, the increase in PC prices will be less than what the rupee has depreciated. Since mid-August, the rupee has lost about 9 per cent against the US dollar - from Rs 35.71 to a dollar in August to about Rs 39 to a dollar now.

"PC prices will go up by about 6 to 8 per cent within a month," said Zenith Computers Chairman and Managing Director Raj Saraf, adding that the depreciation of the rupee has been too sharp for the manufacturers to absorb.

"Right now there is a pressure to increase prices only by 3 to 5 per cent even though the rupee has depreciated much more than that. We can balance some amount of the weakening rupee by the falling prices of components world-wide, but cannot take the entire burden," said DEIL Vice-President Kapil Jain.

The PC industry is heavily dependent on imported components with about 80 per cent of the parts being imported. "Most of the key components such as microprocessors, disk drives, random access memory and motherboards have to be imported as they are not manufactured locally. So any change in the exchange rates has a direct impact on the PC manufacturers," explained an industry analyst.

"What we can buy from India is a bunch of low cost components such as cabinets. The key components, which are expensive, such as chips and disk drives have to be imported," said a leading PC manufacturer.

On the other hand, multinational PC companies such as IBM, Compaq and Dell import fully built-up PCs and are affected even more by the exchange rate fluctuations, said an analyst.

According to PC manufacturers, apart from the falling rupee, the configuration of an entry level PC is also getting more and more powerful, thus pushing the cost upwards. "A few months ago a 166 MHz Pentium with MMX with a 1.2 GB hard disk drive and 16 MB RAM was said to be the latest. But now it has become an entry level system. And the costs have not come down as fast as the system has become obsolete," said a leading PC manufacturer.

- Compiled from the Indian media

Tell us what you think of this story