Asian stock crash prompts UK price fall

While the South Korean economy is to receive bolstering by the G7 members, further trouble in Japan, Hong Kong and Singapore has prompted fears that the crisis may last longer than previously thought. This is expected to reduce prices on vital PC components such as storage drives and memory, many of which are sourced directly from Far Eastern companies.

"If the vendors try to trade their way out of the problem, there will be a glut of components and that means prices will continue to fall," said Charles Bows, Fujitsu Computers UK marketing manager. "That could mean a reduction in overall system pricing."

Few companies were prepared to speculate on how far the pricing of particular components would fall. Chris Buckham, marketing director at Mitsubishi UK said that he was offered CD-ROM drives from Korea at $20 a unit, where the list price is actually $50.

"This is more likely to be a knock-on effect from the fact that many Far Eastern companies over produced on consumer-related products expecting a consumer boom last year," he said. "The boom didn't really happen and there is now excess stock."

Buckham added that a further push for volumes by Asian manufacturers would see yet more components and peripherals on the market and that would in turn reduce prices further. "We are expecting some reductions but we don't expect them to be too dramatic," he added.

Phil Burnham, senior analyst at market research firm Romtec said that a number of factors are currently putting price pressure on PC systems. "Intel price cuts have the biggest effect on pricing but it depends on how long the Asian crisis lasts as to whether there will be any longer term effects on system pricing in the UK," he said. "The pound is also stronger so components are going to be cheaper anyway."