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Recession to provoke extreme competition

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This year will see the outbreak of price war in the desktop and notebook PC markets as vendors battle for customers, market researcher Gartner Group has warned.

To blame are the recession and the depressed state of computer sales. That, reckons Gartner, will force the direct vendors to cut prices to build - or at least maintain - their marketshare relative to the well-known brands.

"The direct vendors will lower margins to do this, which will cause others to give serious thought about how they run their PC business," said Gartner group VP and research fellow Martin Reynolds.

"The price erosion will make other regions of the world buy more PCs," he added, which explains why the company is predict growth rising to 14.5 per cent in 2002. Saturation of the market will follow, driving growth back down again, two single figures in 2003, a trend that will be followed through 2005.

The US economic downturn will extend to other localities, pulling down growth further, Gartner thinks. And if the US recession deepens, growth could fall to single figures even sooner.

As it stands, Gartner is now predicting 10.7 per cent growth this year, down from its earlier prediction of growth in the "mid teens". ®

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