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Intel Accuses Dixons of Damaging Britain's PC Market with Artificially High Prices

Strategic Insights

— 2 min read

Britain's biggest computer market, dominated by the electrical chain Dixons, is criticized by Intel for pricing people out of the PC market. Intel's CEO, Craig Barrett, and vice-president, Paul Otellini, claim that Dixons charges "ridiculous margins" and controls more than 50% of high street sales, despite having only a 15% share of the domestic market.

Intel's accusations come as a UK-based PC market research group, Context, issues a study showing PCs cost about a third more in the UK than in the United States and Germany. The study finds that an equivalent mid-market personal computer costs $1,231 in France, $1,125 in the UK, $748 in the United States, and $741 in Germany.

Key Takeaways:

  • Intel accuses Dixons of artificially high pricing, controlling more than 50% of high street sales despite having only a 15% share of the domestic market.
  • A study by Context finds that PCs cost about a third more in the UK than in the United States and Germany.
  • The equivalent mid-market personal computer costs $1,231 in France, $1,125 in the UK, $748 in the United States, and $741 in Germany.
  • Competition from supermarket chains in the UK, such as Tesco and Asda, promises lower prices for customers.
  • Tesco is on course to capture 10% of the UK computer market, selling nearly 10,000 computers between August and October.
  • Intel's Pentium II processor, which accounts for at least a third of the total cost of a PC, has been driving down prices.
  • Analysts agree that British shoppers are being charged too much for computers, with prices in the UK being around 20% higher than in the rest of Europe.

Statistics:

  • PCs cost about a third more in the UK than in the United States and Germany.
  • The equivalent mid-market personal computer costs:

+ France: $1,231

+ UK: $1,125

+ United States: $748

+ Germany: $741

  • Tesco sold nearly 10,000 computers between August and October, with its Siemens PCs costing $699 and PCs for under $500 available.
  • Asda is also entering the market with a $499 PC.

Sources:

  • The world's biggest computer chip manufacturer has accused the electrical chain, Dixons, of damaging Britain's PC market. (The Times)
  • Intel claims that Dixons, the UK's leading high street seller of personal computers, is pricing many people out of the PC market. (The Times)
  • Dixons defended its pricing policy, arguing that the introduction last month of its first personal computer costing less than $500 showed its commitment to low prices. (The Times)
  • A study by Context finds that PCs cost about a third more in the UK than in the United States and Germany. (Context)
  • Tesco is on course to capture 10% of the UK computer market, selling nearly 10,000 computers between August and October. (The Times)
  • Intel's Pentium II processor, which accounts for at least a third of the total cost of a PC, has been driving down prices. (The Times)

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