Pc Prices Set To Dip On Intel Move

PC prices in India are set to fall with the world's largest chip manufacturer, Intel, slashing prices of its microprocessor (chips) products by 5 to 34 per cent.

The across-the-board cuts include the 1ghz Pentium IIIs used in desktops, Celerons running at 700 mhz and 933 mhz as well as Pentium III Xeons used in servers. According to industry watchers, the Intel move follows the Advanced Micro Devices' (AMD) decision to lower prices of its Athlon and Duron processors earlier this month.

PC manufacturers in India are already working out price cuts and most have decided to pass the benefit of the reduction to customers. Microprocessors comprise about 20 per cent of a PC's total price.

 

According to analysts, if the manufacturers decide to pass on the whole price benefit to the end-consumer for a PC worth Rs 50,000, the prices cuts are expected to range between Rs 500 and Rs 3,400.

"These cuts will depend on the inventories that companies have and the percentage of the price cut the manufacturers want to pass on to the end-consumers," said Vinnie Mehta, director, MAIT. IBM India country manager for personal computers Sashi Mal pointed out: "While there will not be any impact of the prices of volume boxes like the entry level PCs, we expect the prices of high-end computers to come down."

Mal points out that this will help in pushing PC sales volumes and that IBM plans to introduce high-end computers in the country, taking advantage of the sharp cut in chip prices at the upper end of the market.

IBM expects the price cuts to be announced in 40 to 60 days, after chips at the new rates are shipped into the country.

HP India, however, expects the price cuts to be effective from mid September and is working out the exact impact of the fall in chip prices on their total cost of production.

"A price cut in any PC component, especially a crucial one like the microprocessor, will definitely bring down the prices of computers. However, since most of the price cuts have been announced for chips used in high-end PCs, it will be restricted to that range," said Subin Joseph, market development manager, Hewlett Packard India.

Indian computer major HCL Infosystem is also reworking its pricing strategy and is studying the impact of the slash in chip prices. Company sources said that an announcement will be made soon.

Prices of the lower-end Celerons has been slashed in the range of 26 per cent to 34 per cent. Processors running at 700 mHz now cost $138, down from $192. The higher-end Pentium III Xeon processor went down by 17 to 22 per cent with price of 933 mhz Pentium III Xeons used in server computers reduced to $558 from $719 each.

AMD, Intel's worldwide competitor, had earlier announced that it is looking at expanding its market share in India from the existing 18 per cent. The company, which set up its representative offices in India recently, is also entering into alliances and partnerships with Indian companies.