PC makers risk high price model despite slump in market

by CXOtoday News Desk    Aug 12, 2013

PC

Earlier this year, there were several reports on the slump of PC markets and the increasing popularity of tablets, phablets. The primary reason for the slump being that buyers refuse to pay a premium price for laptops running on Microsoft’s Windows 8. According to ComputerWorld, almost all new laptops built with Haswell chips are available for a higher price, $800 and above. The latest Samsung ATIV Book 9 Plus laptop has been priced at $1400.

Roger Kay, president and principal analyst at Endpoint Technologies Associates suggests that PC makers are facing a dilemma. With the high level of completion in the PC market, companies continue to sustain high prices not realizing that demand is low. A certain section of buyers who are loyal to Apple may be ready to pay a premium price but not for other companies. “The thought that you can sell a $1,400 notebook is ridiculous. The mess is partly credited to Windows 8,” added Kay.

According to Mikako Kitagawa, a principal research analyst at Gartner, some companies are of the opinion that they need to hike the prices of laptops to position it as a premium product, compared to tablets. “In general, many vendors stay away from the low-priced market and secure better margins on the mid- to high-end laptops,” Kitagawa said. However, companies like Dell are one of the exceptions who are allowing their product Inspiron 15R, to be sold at $599 after a $300 discount.

Generally PC’s without the latest Haswell chips usually offer discounts and low prices because they use older versions of processors. These laptops have low end processors with basic features which can be utilized for mostly internet and minimal productivity and are aimed at students, and graduates. The premium ultrabooks like Samsung’s Ativ 9 Book Plus have high-resolution screens, solid-state drives and other high-end features, catering to a more sophisticated customer base. However, the companies which are still launching Windows 8 products at high prices are defying market demand in this PC market slump.

Another reason for differentiation of prices is that, companies often price their products differently in different countries. For example, the price of some PCs in emerging market may differ from developed markets. Microsoft representative Pip Marlowtold ABC news,”We don’t believe that every market is the same, if you are selling into an emerging market for example, where the cost of living and the availability of technology and the availability of customer perception there, the competition might be completely different compared to a different market.”

“If we price our products too high, then our customers will make different choices,” added Marlow. Analysts say that lower volume of sales does not disappoint most of these companies because they are making up for higher prices to cover up the market share. So until the Haswell chips used by companies are not shipped in volume the prices will continue to be exorbitant for PCs.