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PC prices have fallen through the floor in the US prompting speculation that the UK could be hit by a price war in the new year. The cost of a PC plummeted to an all time low in November as a third of all consumer machines sold cost less than $800, according to market researchers PC Data Corp. Registering a drop of seven per cent between October and November, PC Data says that prices have fallen by 26 per cent from a year ago. Such downward pressure on UK prices could preface a shakedown in the home PC market. With smaller retailers struggling to keep pace with the high street big guns like Dixons, which uses its purchasing power to undercut its competition. Manufacturers may also struggle to continue to play in the retail market if margins continue to plummet. "That certainly is a big drop," said UK PC analyst Robert Cashman from Context. "But I think it's unlikely to happen like that here in the UK. We may experience some price reduction but nothing on that scale," he said. Tumbling prices in the US are obviously not going to ruin Christmas for the bigwigs in the UK market. No one was available for comment from Compaq, Dell or IBM -- perhaps they were all enjoying some seasonal festivities of their own. ®

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