A Real Battle With Virtual Prices

By Vivek Bhatia

Are they programming a price war? On March 2, 1998, Compaq India, the Indian subsidiary of the $24-billion US-based Compaq Computer launched its new Deskpro 1000 PC, a low-cost Pentium-based computer designed for price-sensitive emerging markets. By contemporary international standards, the Deskpro 1000 is a stripped-down PC, lacking a CD-ROM drive as well as multimedia features. The company intended the 1000 to be an entry-level commercial desktop with current technology--but, crucially, at a price-point way lower than that of its existing models.

Rs 39,990, to be precise. A price that's lower than anything that a transnational has ever used in this country for its PCs--and a whole Rs 13,000 lower than Compaq's earlier entry-level price of Rs 53,000. The company proclaimed the price in full page ads in major newspapers, and it seemed that another PC price war was under way. Actually, however, it wasn't. For, Compaq's stated price did not include a monitor despite the fact that the advertisements carried large pictures of the Deskpro 1000 along with what was apparently a 14-inch Compaq monitor. Of course, it isn't an entirely unknown practice in the PC industry to carry such advertisements, with the small print listing the items not included in the price. The Compaq ad, too, said "not inclusive of monitor." A 14-inch Compaq colour SVGA monitor, the minimum that could be expected to sell with such a machine, would add about Rs 10,000 to the price--bringing the Rs 39,990-figure closer to Rs 50,000.

Twenty-four hours later, Compaq's chief competitor, the Rs 637-crore HCL Infosystems, Indian infotech's most aggressive marketer, launched its counter-attack. hcl's full page advertisements were direct attacks against Compaq, bluntly stating that HCL's PCs were always sold with monitors, and that, for the same price, the company had been selling a PC with better accessories, including an inkjet printer as well as a lot more software--including Microsoft Works and Excel. Two days later, the Rs 340-crore Hewlett-Packard India got into the act with a slightly more sophisticated argument: it advertised its Rs 56,000-Vectra, but drew attention to some additional technological whizbang it claimed its PCs had.

In a market where prices move only south, skirmishes of this kind aren't new. Already, the price differential between two all-specs-equal PCs from HCL and Compaq has narrowed marginally from 25 per cent to just above 20 per cent, in favour of the former. Whether this alone will be enough to change existing buying patterns remains to be seen. But price reductions are, evidently, coming faster now than technology companies are able to cut costs. And lower prices have simply become a way to maintain parity, not to forge ahead. The battle for a real competitive edge in PC-marketing has long shifted to service: it's time India's infocorps logged in.

Http:/Www.Winners.Com

By Vivek Bhatia

They wowed Websurfers. Who promptly rewarded them with the Webbies--a.k.a., the Oscars of the Net. Voted for the award by about 100,000 readers of The Web magazine, which gives the awards, the winners spanned as many as 21 categories. The major virtual champs included News.com (www.news. com) for News; CNN and Time magazine's allpolitics.com (www.allpolitics.com) for the best legal and political site; Salon magazine (www.salonmagazine.com) for the best 'zine; and Exploratorium (www.exploratorium.edu) for the best science site.

The awards highlighted the fact that the dividing line between creation and commentary is non-existent on the Web. The Arts winner, for instance, was not an artzine, but a work of art named entropy8 (www. entropy8.com). Likewise, two of the nominees in the Radio category were Net-based radio-stations. And the Games winner, Berzerk (www.berzerk. com) is also an on-line game, and not a site about other games.

The staid Money/Business category was, obviously, an exception. The nominees included a self-help law centre (www.nolo.com) as well as the only government site on the nominees list, that of the US Securities & Exchange Commission (www.sec. gov). Award-winners today, these are probably the sites which Web-advertisers will throng tomorrow for a better Net effect.

Rebooting Bottomlines

By Vivek Bhatia

The chips are down. In just one week, four global infotech giants--the $25.20-billion Intel, the $23.60-billion Compaq Computer, the $29.80-billion Motorola, and the $2.36-billion AMD--all warned Wall Street of dropping earnings. Normally considered powerhouses of profits, they shocked analysts and the world of infotech alike. "Has," asked a Merrill Lynch report, "high tech's bubble burst?"

Intel blamed a slowdown in PC sales while Compaq held the price wars responsible. Both are right. Not only has the price of the average PC dropped from $1,500 to less than $1,000, the surge in volumes that this should have generated has not materialised either. Is it time for the next big change in the infotech industry--based on raising prices instead of processing power?

Mayhem In The Mobile Market

By Radhika Dhawan

It's not a cell-out. On the contrary, the Department of Telecommunications' (dot) decision to raise the annual tariff for the country's cellphone operators from Rs 5,000 per subscriber to Rs 6,023 per subscriber from the fourth year of operations has the sector worried. Frets T.V. Ramachandran, 52, executive vice-chairman, Cellular Operators Association of India (COAI): "The industry will just have to close down."

Why? Well, while the national average billing per customer was between Rs 900 and Rs 1,000 per month in 1997, new users are coming in only at the low end. For instance, in Mumbai, subscriber revenue is likely to fall from Rs 2,000 per month three years ago to Rs 600 soon. That will put pressure on the operators who may have no choice but to raise subscription charges and tariffs. The likely impact? The Mumbai market, which was to net 1.8 million subscribers by 2002, may end up with just 8,50,000 subscribers instead. Since many of them could go under with those numbers, it isn't surprising that cellular operators are lobbying furiously for a more friendly tariff. Will dot dash their hopes?

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