While Dell remains ringside, direct selling rival Gateway 2000 has finally joined the fist fight raging in the sub-$1,000 PC market.
Gateway is expected to start offering a PC for the business market with a 166MHz Pentium processor, 16Mbytes of memory, networking hardware and a 15-inch monitor for under $1,000. The move is expected to coincide with the next week?s expected price cuts on Pentium processors.
Dell refuses to be drawn into the fray, despite the view of marketing research firm Computer Intelligence that systems selling for under $1,000 may constitute up to 32 per cent of the retail PC market this year.
Ray Badmington, desktop marketing manager at Dell, said: ?Currently we view the whole sector as a dumping ground for old technology.?
But Badmington added that the company may announce a sub-$1,000 product at a later date. ?It could well transpire that we will enter the market but at the moment our most profitable deals are coming from Pentium II based machines.?
Another direct seller, US catalogue vendor Micron, has also recently announced a sub-$1,000 model but is aiming for a lower end of the market than Gateway. The company is offering a 233MHz MMX Pentium with 16Mbytes of memory, a 3Gbytes hard drive and a CD-Rom, for $999 - with the option of a 15-inch monitor for an additional $200.
As the downward spiral of PC prices continues - accelerated by Intel's fierce reductionsin chip costs - the most violent cuts are coming from the channel suppliers.
Digital Equipment decided this week to drop prices by up to 20 per cent on its line of business PCs, with its lowest priced desktop PC now being cut to $863.
But Badmington sees the whole market shift as worrying, believing vendors can only bite into prices so aggressively at the cost of service and up to date technology. He claims Dell?s reassuringly expensive strategy is the right way to go. ?Companies are snapping up cheap PCs at the moment but they may be in for a shock in six to nine months' time when the machines are obsolete and useless.?
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