Germans shoot for bargain PCs

FRANKFURT -- 'Tis the season of peace on Earth and good will toward men -- unless you're talking about Sleep 'n Snore Ernie or, in Germany's case, bargain basement PCs.

While the new Ernie doll has set off near riots in U.S stores, the emergence of $1,000 PCs in the last few weeks has sent thousands of Germans off the deep end -- including one who pulled a pistol to make sure he got his hands on one of the deeply discounted machines that have been flying off shelves in cash-and-carry outlets this Christmas season.

Waving a gun to get a PC might seem extreme, but until now, there haven't been many PC's available in Germany for under $1,500, and those available have been obsolete, low-performance models. While the current models are still only this year's leftovers, now that a price blitzkrieg has been set off, hordes have swamped the discount outlets.

"The problem here [in Germany] is that you have to pay a premium for a brand name computer," said John Gilardi, a journalist in Frankfurt who recently bought a computer. "The first system I looked at was 2700 marks ($1,500) and it didn't even have a monitor."

The PCs responsible for the chaos were offered by cash-and-carry grocers Aldi Einkauf GmbH, Lidl & Co. and others new to the PC fray. Most bought the PC's from Fujitsu or no-name German manufacturers who were looking to dump their inventory of 166MHz Pentium MMX machines before the year's end.

Aldi and Lidl bought up lots of the outdated computers below cost, stacked them next to their standard holiday specials like toasters, pantyhose and coffee makers, and stood back as ads drew in swarms of shoppers eager to join the computing community.

Many store managers arrived for work to find hundreds waiting in the cold to cash in on the hot deals. Fistfights have broken out in several stores as mobs charged the shelves. The pistol-toting man was reportedly pushed into a door post and slightly injured. When he shook off the pain and got up, all the PCs were gone, so he pulled the gun to convince a fellow shopper to fork over a PC.

So far, Aldi has emerged as the leader in the discount frenzy. The company has sold over 100,000 Pentium based machines during the holiday buying season and has ushered in a new PC price era in Germany. Most recently, the store offered a desktop model for $998.

Arch rival Lidl scored by signing a deal to dispose of excess inventory for Fujitsu, a Top 10 vendor in Germany.

Discount supermarket chains may seem an odd venue to break the $1,000 barrier, but Germany's established computer dealers aren't complaining. Since these machines are basic models, most buyers still have to purchase software, printers and other extras.

One computer shop owner cheered the arrival of cut-rate PCs at a nearby Lidl supermarket. "This was the best day since I've had my business," he told Die Tageszeitung, a German newspaper.

Established vendors like Vobis Microcomputer AG conceded competition from cash and carry chains ups the pricing pressure in Germany, where PCs have typically cost 15 percent to 30 percent more than in the United States until the recent chaos.

But they also note the bargain-basement PC's have outdated processors, motherboards and chip sets, and are hoping that new PC users will gain some proficiency and want to upgrade. Some of the discounted machines, for example, do not have the chip sets required to support Windows 98 when it arrives next year.

Gilardi had actually purchased one of the discounted Fujitsu models but later returned it. "I had a problem with the scan disk software when I was setting up the system. I wasn't happy the with the quality, so I took it back." Instead, he spent a little extra and bought a Compaq Presario 200MMX.

Other types of stores are also eyeing PC discounting as a way of attracting customers in an industry hurting for growth. German retail sales for 1997 are expected to decline for the fifth year in a row. Analysts are eyeing Tshibo & Co., a chain of coffee shops that sells a small selection of merchandise that changes monthly. In the new year, the chain may have customers ordering cappuccinos with PCs to go.

It remains to be seen whether Compaq Computer Corp. and other mainstream players will lose much market share to Aldi and Lidl in the battle over sub-$1,000 PCs -- a segment that approaches 30 percent of the overall market in the United States

Until then, Germans will have to duke it out in the aisles of their grocery stores to get bargain PCs.

As for the gun-wielding guy at the Aldi store in Konstanz, in southern Germany, reports emerged that the gun was a fake. But the culprit was charged with robbery and extortion. No word on whether he got to keep his PC.