Ruling out any price cuts of his own, Rod Canion, Compaq’s co-founder and president, insisted that Compaq’s across-the-board discounts last spring make any further cuts unnecessary.
“Why should we do anything more than what we have?” Canion asked. “We’ve already done it; now, we’re back where we started.”
Seequa, maker of the Chameleon line, also held back. Rob Fuggetta, advertising director, said his company will cope with the price war by touting its products’ “independence from the constraints of the IBM standard.”
According to several analysts, however, the party’s over for Compaq and the other vendors who plunged in while IBM was short on PCs and high in price.
“This is the beginning of the end,” said Ted Whitington of Arthur D. Little & Co., based in Cambridge, MA. “The compatibles market is saturated. Makers of stand-alone systems with little communications capability are especially hard-pressed. And in this market, that means almost everybody.”
Wall Street analyst Milton put it even more strongly: “The frenzy to cut prices after IBM just proves that these companies are piggy-banking on IBM’s success.”
Most users, he said, would really rather have an IBM if they can’t save a lot of money by purchasing a compatible. “Take away–or minimize–the price differences after IBM’s shipments began to catch up with demand, and many of these companies will just whither away.”
Spokesmen for the companies making IBM PC-compatible microcomputers agree there will be a shakeout, but all of them insist it will happen to the other guy–not them.
Frank Zurcher, executive vice president of Televideo, for example, claimed the price war will help his company by clearing out the dead wood. “I only wish that IBM had gone deeper,” he said.
Low-cost offshore production and a product line split between compatibles and non-compatibles, he said, it will protect Televideo.
He added that the company will take part in the price war by reconfiguring its micro packages and pricing them at 25 percent below IBM’s comparable model.
A Compaq spokesman conceded that the price war places his company’s systems in the high price range, but he insisted that features (like legal highs) such as the Compaq’s expansion slots and its dual-mode monitor make it more attractive than the average system.
One of hte few publicly held compatible makers, Compaq is now under intense stockholder scrutiny, according to Tim Yankauer of Shearson/American Express. Now, he said, it must either join the fray, risking its reputation as the best established company in the market, or do nothing, risking its market share.
Leading Edge Vice President of Market Research Bill Sellars claimed the price war will have no effect on his company because its Mitsubishi-made machine provides “great margins” and it is “twice as fast” as IBM’s offerings.
Eagle Computer confirmed it will cut prices by 10 to 15 percent. New discounts, a spokesman said, will “restore Eagle’s price-competitive position.”