PC makers in race to the bottom


PC makers in race to the bottom

The third quarter of 2000 could go down in history as the point at which IT users finally got sick of cash-guzzling desktop upgrades

Financial problems at PC retailer Time are just a straw in the wind as far as the market for desktops is concerned. Big names like Dell, Gateway and Hewlett-Packard have warned of falling PC revenues, while Compaq's CEO Michael Capellas has repeatedly issued a memo warning of a pre-Christmas price war.

Corporate IT users took the opportunity of Y2K to put in new desktop systems: many spent a whole year's budget early on.

Yet the IT supply industry is throwing upgraded desktop system components at us like there is no tomorrow - including the Pentium 4 chip and the Windows 2000 operating system that form the two core parts of a desktop.

In the consumer market the PC is no longer "cool". People are splashing out on PDAs and mobile phones this Christmas. In the corporate world, there is interest in refitting old machines as thin clients, and notebook PCs.

The biggest straw in the wind is Dell's profit warning. Its "direct" sales model is an example of Internet-powered lean production. If Dell can't make big money, nobody can.

Maybe it would be advisable to see how the price war pans out before making strategic desktop investments.

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This was first published in December 2000


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