Personal Computer Prices Set to Plummet as Chip Makers Ramp Up Production

Strategic Insights -

The PC industry in Melbourne and beyond can expect a significant shake-up as leading microprocessor manufacturers and their competitors gear up to release high-powered chips that will drastically reduce prices for personal computers. This shift is set to plunge the cost of high-performance machines by mid-year, making them more accessible to a wider range of consumers. According to industry insiders, Intel's release of the DX4 chip and the anticipation of other companies' clock-tripled processors will lead to continued price cuts for both 486 and Pentium lines. The increased competition and access to cheaper chips will make it possible for users to purchase 486 machines for under $3000, a decrease from the current price of over $3000.

Key Takeaways:

  • Intel's release of the DX4 chip and the clock-tripled processors from AMD and Cyrix will lead to a significant drop in prices for 486 DX2 chips, making them more accessible to the general public.
  • The increased availability of cheaper chips will lead to a drastic reduction in the price of 486 machines, with predictions that they will be selling for as low as $5000 by mid-year.
  • Several manufacturers have dropped 386-based machines from their production lines in favor of 486 offerings, citing the need for higher-powered machines to run applications such as Word for Windows 6.0.
  • Total Peripherals' managing director, George Karabassis, reported a 28% increase in sales so far this year, primarily due to the demand for high-powered 486 DX2 66MHz and DX2 33MHz machines.
  • Compaq's manager of commercial products, Peter Boylan, stated that the company is keen to integrate the DX4 chip into its line-up and expects the 486 DX2 66MHz to enter the home market this year as the price curve comes down.
  • AMD and Cyrix are expected to release their clock-tripled chips, the AMD K5 (Kryptonite 5) and the Cyrix M1 processor, which will be up to 50% faster than the Pentium and will be compatible with Windows.

Statistics:

  • The price of 486 DX2 chips fell from $610 to $560 in one day on the Asian spot market.
  • Users are currently paying over $3000 for 486 machines, with advertisements in the Green Guide promoting a Microarts 486 DX2 66MHz PC with 4MB of RAM for $3590.
  • Digital officials have confirmed that AMD's prices for 486 DX chips are as much as $100 cheaper than Intel's.
  • Intel's premium chip set is being attached to entry-level computers far more quickly than with the 486.
  • The PC industry is expected to reach $60,000 units for 1994, primarily driven by the demand for 486DX 33MHz and DX2 66MHz machines.

Sources:

  • Charles Wright and Lisa Mitchell, Melbourne PC industry insiders
  • Edward Jozis, assembler of high-quality clones for corporate and government customers
  • George Karabassis, managing director of Total Peripherals
  • Peter Boylan, manager of commercial products at Compaq
  • Mark Phibbs, IBM's personal systems product manager
  • Digital officials
  • IBM's Blue Lightning 486 chip 33MHz/100MHz press release
  • AMD's press release on the AMD K5 (Kryptonite 5) processor