Analysts predict PC price war

PC makers will turn to Darwinian tactics this year, with falling profit margins squeezing out smaller companies and leading to lower prices on the high street

PC makers are turning to cut-throat tactics to raise their market share, even at the expense of profit margins, and the result will be a 10.7 percent growth in the PC market this year, according to analysis firm Dataquest.

The new tactics will also lead to more PC makers going the way of Micron Electronics, formerly the number 12 PC maker in the US, which on Friday anounced plans to sell off its PC business to focus on Web hosting.

Dataquest, a unit of Gartner, predicts that this year will see an "intense battle for market share", as multinational PC makers cut profit margins and force smaller competitors out of business. "We anticipate a price war in the United States in 2001, as direct vendors, Dell and Gateway, endeavour to gain market share from Compaq, Hewlett-Packard and IBM," said Martin Reynolds, group vice president and research fellow for Gartner, in a statement.

PC market growth outside the US and Europe -- particularly in Asia -- is expected to continue growing more rapidly, and Dataquest predicts global manufacturers may shift their focus to those areas to maintain profits.

Worldwide PC shipments this year will total 144.5 million units, Dataquest projects. The market overall has been hit both by the slowing US economy, which many believe is about to affect Europe as well, and by saturation in the European and US markets.

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