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|May 27, 1998||
Bloodbath in India
Compaq predicts there's room for only four PC makers
Compaq Vice-President Mike Winkler predicted this week that personal computer companies are going to wage their wars in Asia. And that the battle for India would be crucial.
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Compaq has emerged as the number two company in the personal computing business after taking over big competitors like Tandem and Digital in quick succession. With a turnover of $247 million, it can now throw a significant challenge to IBM's supremacy.
The Houston conference was a brief on Compaq's strategic course of action in the wake of some brutal price-cutting across the globe.
India too saw heavy downward corrections on Compaq price tags last month as domestic and global majors are getting anxious to capture the largest share of the market that has suddenly begun to grow at a fantastic pace.
So keen is the competition that HCL, the largest Indian PC maker, has threatened to sue Compaq for "misleading prices" in its advertisement blitz in India.
Undercutting has become the sharpest weapon in price-sensitive India and the situation, though a little less severe, is true for the rest of Asia too. Consequently, there has been a dramatic crash in PC prices across the continent.
Jerry Meerkatz, vice-president and general manager of Compaq's Enhancements and Monitors Division, admits that such sever competition is reflecting badly on the bottom line.
Says he "No doubt computer companies are facing financial losses because of this price-cutting." He, however, is confident that "this will continue for one more year before prices stabilise."
Though Compaq is still a small player in Asia, Winkler is very optimistic about further sales and growth. He feels that it is in this context that price-cutting assumes greater significance.
To a specific question, Winkler hazarded that small companies would either have to fold up or be eaten alive by bigger players. "They can't sustain competition. Only IBM, Hewlett-Packard, Compaq and Dell will continue to expand," he is confident.
Together, these four PC giants will capture as much as 70 per cent of the global market, Winkler claims.
After its manufacturing centre in Singapore, Compaq has revealed intentions of setting up another unit in Asia. Now, given Winkler's concern about winning the India battle, will the second plant come the country's way?