Is a PC Price War Afoot?

By Pedro Pereira  |  Posted 2007-11-16 Email Print this article Print
 
 
 
 
 
 
 

Opinion: Things are sure to heat up as Dell enters the channel and Acer works to integrate its Gateway acquisition.

As the year winds down, one of the areas to watch in the IT industry is the PC vendors.

With Dell getting real about the channel, Acer integrating its acquisition of Gateway and Lenovo still trying to find its place, PC vendors are keeping things interesting. The pressure on some to maintain their share and on others to grab more may even lead to an old-fashioned price war that will have buyers licking themselves while potentially making things harder on the channel.

Acer's recent acquisition of Gateway, for instance, could result in some serious pricing pressure if the vendor takes an aggressive stance toward boosting market share. Any attempt to gain share through pricing is sure to elicit a response from competitors such as Dell, HP and Lenovo.

Such an eventuality would come at an inconvenient time for Dell as the vendor seeks to establish itself as a partner to the channel. Dell, which once urged customers to cut out the middleman and buy direct, is in the midst of launching a formal channel program, the details of which have trickled out of Round Rock, Texas, in recent weeks.

This week the vendor disclosed that it will have a multi-tiered channel program. The entry-level tier will consist of partners permitted to display a Dell "authorized reseller" logo. Other partners will have the opportunity to qualify for certifications on certain technologies, such as storage.

Dell also is putting in place a deal registration mechanism and compensation incentives to encourage its sales teams to work with partners, said Paul Bell, president of the Americas for the vendor.

The efforts to eliminate the potential for channel conflict will be key to how Dell is ultimately received by the channel it eschewed for so long. If partners find that Dell sales reps are trying to contact the partners' customers directly, there will be hell to pay.

Complicating Dell's task will be its efforts to integrate the acquisitions of storage vendor EqualLogic and Everdream, a provider of software as a service, as well as whatever pricing actions Dell's competitors may take.

Dell no longer has the price advantage against competitors that it once did. If HP and Acer decide to get overly aggressive on pricing, Dell is going to be under that much more pressure to make sure its sales teams don't fall into the temptation to bypass channel partners to win deals.

And then there's Lenovo, whose market presence has failed to meet expectations when the company first absorbed IBM's PC company. Will Lenovo finally manage to leverage its manufacturing infrastructure in China to overwhelm competitors here? So far none of the original prognostications that had Lenovo giving Dell and HP a run for their money have come to pass.

And now that Acer has absorbed Gateway, Lenovo has actually fallen behind its Taiwanese competitor in market share.

But Acer faces challenges of its own. The company plans to keep all the brands it acquired with Gateway, including eMachines and Packard Bell, and that will take some effort to manage.

HP appears to sit in the most enviable position at this point, having eliminated the channel conflicts of years past and gained share against Dell. Of course, in this business you can't sit around and wait for competitors to stumble. HP is going to keep an eye out for acquisitions, especially as Dell continues to diversify by gobbling up companies in various technology areas.

And if a price war takes place, HP will likely get into the fray.

Whatever happens with PC vendors in coming months, at least it won't be boring.

Pedro Pereira is editor of eWEEK Strategic Partner and a contributing editor for The Channel Insider. He can be reached at ppereira@­ziffdavisenterprise.com.

 
 
 
 
 
 
 
 
 
























 
 
 
 
 
 

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