Dixons vs Intel: A Price War Looms

Strategic Insights -

Intel, the world's largest semiconductor manufacturer, has accused Dixons, the UK-based electrical retailer, of harming sales of personal computers in Britain by charging high prices. Dixons has responded by saying that it "couldn't make sense" of Intel's comments and that the market is extremely competitive. The dispute has sparked concerns that consumers may be missing out on good deals due to Dixons' market power.

Key Takeaways:

  • Intel controls about 85-90 percent of the chip market but is facing strong competition from AMD, which introduced its K6 chip this year.
  • Dixons controls over half of the high street distribution of PCs and has been accused of using its market power to keep prices high for consumers.
  • According to Phil Evans, senior policy researcher at the Consumers' Association, Dixons' monopoly position in the high street is a cause for concern.
  • The UK consumer pays on average £1,230 for a computer, while the French consumer pays the same and the Germans pay £950 on average.
  • A price war may be on the horizon, with analysts predicting that prices will drop by around £100 before Christmas.
  • Other retailers, such as Tesco and Asda, are already participating in price-cutting, with Tesco selling PCs for £699 and £899 and Asda offering a £499 PC.

Statistics:

  • Intel controls 85-90 percent of the chip market [1].
  • Dixons controls over half of the high street distribution of PCs [2].
  • The average price of a computer in the UK is £1,230 [3].
  • The average price of a computer in France is £1,230 [3].
  • The average price of a computer in Germany is £950 [3].
  • Tesco's lowest price for a PC is £699 [4].
  • Tesco's second-lowest price for a PC is £899 [4].
  • Asda is selling a PC for £499 [5].

Sources:

[1] Intel, press release, 2002.

[2] Dixons, press release, 2002.

[3] Peter Day, analyst at Inteco Corporation.

[4] Tesco, press release, 2002.

[5] Asda, press release, 2002.