Intel set to slash prices

The company, which closely guards these details to avoid any market reaction, refused to confirm or deny the information. "This is an absolutely transparent process. The price-cuts are for the entire region (South Asia) so I won’t be able to comment on it," said a company official.

Speculation on the price drop and near certainty of a cut, has already prompted players to advertise rates 20 per cent lower than prevailing prices. Market leader Zenith Computers has started taking bookings at the reduced prices,promising to deliver the systems between the May 15 and June 15. "The Intel cut has been factored in the new prices," said Rajkumar Saraf, managing director of Zenith.

The cut is especially significant because the Pentium III is Intel’s most expensive processor to date. At around Rs 35,000 (prices vary for GIDs and OEMs), its price is nearly six times that of a Celeron. Even the Pentium II which employed a new architecture (Slot 1) — different from Intel’s earlier processors — was priced only at Rs 15,000 when it made its debut.

Given this, even a small percentage cut will have a significant impact on the cost of the system. The last Intel price cut was in January and ranged from 15 per cent to 20 per cent across all its products. So far its highest drop has been 35 per cent, said a GID.

In the next four to six months Pentium III prices are expected to come down by Rs 25,000. Intel will also phase out its Pentium II 333 MHz by that time. "The certainty of price drop is always there. But to predictwhen exactly it is going to be and how much, is like trying to predict rainfall. You know it is going to rain but you never know how much," said a GID about the likelihood of another Intel price cut in June.

Pentium price war

MUMBAI: Zenith’s outrageously low prices for Pentium III systems have provoked competitors to draw parallels with Pertech Computers Limited (PCL) which folded up after not being able to fulfil its delivery commitments. Its prices are Rs 20,000 lower than GID prices which are perceived to be among the lowest in the market. "My guess is that they will be able to deliver only in early July after a second Intel price cut. We would never get into this game," said a GID. Zenith’s competitor in the branded domestic PC market, Minicomp, said its prices had always been lower or equivalent to Zenith but that it not considering a Pentium III campaign just as yet. Saraf is quick to react to any comparisons with PCL.

He points out that unlike PCL, Zenith is only taking Rs 5,000 upfrontand is even willing to provide a bank guarantee if the amount involved is huge. "All deliveries will be done by June 15 as promised," said Saraf. Apart from the Intel price cut (which will have the maximum impact) Zenith has also factored drop in memory, hard disk and monitor prices. "We buy in large volumes and get better discounts compared to assemblers," added Saraf. In early 1998, Zenith had dropped prices on Pentium multimedia systems triggering a PC price war.