Factors Affecting electronics Cost
Staff -- Purchasing, 5/17/2001
- Telecommunications prices will continue to fall, albeit less rapidly than the pricing free-fall seen through mid-2000. Telecom companies report stabilizing prices for long-distance services. A few months back, WorldCom declared price floors and said it would not chase unprofitable business. Global Crossing says prices for capacity on its undersea networks are remaining fairly stable. Struggles among some local service competitors have allowed SBC to actually raise monthly prices for high-speed Internet-access service over digital-subscriber lines from $40 to $50.
- Hand-held computers are getting cheaper. Faced with bloated inventories, Palm Inc. has chopped prices on several older models. The Santa Clara, Calif.-based company, which dominates the market for pocket-sized digital assistants, has reduced the price tag on its two-year-old Palm Vx to $299 from $349, just weeks after cutting from $399. Palm also cut the entry-level m100 model to $129 from $149, and the IIIc, which has a color screen, to $299 from $329.
- Intense downward pressure continues on flat-panel displays. Three-Five Systems of Tempe, Ariz., says accelerated price reductions, which have reduced gross margins, continue to plague liquid crystal display (LCD) producers because both capacity and end-user inventories remain excessive. "Weak and uncertain demand in the cellular handset industry and continued issues with handset inventories have led to order cancellations because of delays and push-outs for existing and new customers' production programs," the company says.
- Kingston Technology Co. is trying to buy into the server and workstation memory module market by cutting prices almost in half. The Fountain Valley, Calif., firm says it wants a piece of the rapidly growing server and workstation memory market, so it's slashing salestags for DIMM s used in the Compaq Proliant ML570 by 44% and modules for the Hewlett-Packard 9000 series by 50%.
- Supply chain management (SCM) software suppliers are under pressure to cut prices, or watch executives postpone programs until the economy rebounds. SCM projects won't fall by the wayside during the current slowdown, says Garry Gray, director of SC information systems at Hewlett-Packard, Palo Alto, Calif., but companies are looking to renegotiate contract prices. "Only high priority projects that align with our business strategy will be funded," he says.
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