Sony Pushes PC Prices Higher

Faced with rising prices of key components, Sony plans to raise prices worldwide across much of its range of personal computers.

"There will be price increases across the board starting in Japan," says Merran Wrigley, a spokesperson for Tokyo's Sony. "There is no definite date but it will happen in the near term. We anticipate price rises across the range of notebooks and desktops."

The Tokyo company has already raised the price of one machine. It added $150 to the price tag of an improved version of its Vaio W, currently Japan's best-selling desktop machine, and attributed the majority (around $120) to higher component prices.

Apple's Example

Sony's decision comes two weeks after Steve Jobs, Apple Computer's chief executive officer, announced the Cupertino, California, company was raising prices on its hot new iMac computer by $100 for the same reason.

"Since we introduced the new iMac in January, component prices have been increasing dramatically," Jobs said during his keynote address at MacWorld Tokyo. "The price for our flat screen has gone up 25 percent in the last few months. The price for memory has gone up 200 percent since we introduced the new iMacs--that means it has tripled in cost. And this is an industry-wide problem, it is not just Apple."

With the rises, Apple was faced with a problem that is now at the door of all major PC makers.

"Every manufacturer is going to have to do one of two things," Jobs said. "Either remove features from their product or slightly raise the prices of their products. We think the configuration of the new iMacs are great ... so we have decided to do price adjustments. We've chosen $100."

Making a Decision

In addition to Sony, some of Apple's other competitors are also taking the same path. Tokyo's NEC says price rises are on the way but will be factored into new products rather than added onto prices of current machines.

"There will be no price rise on the existing product line-up but NEC is planning a rise on our new line, which is expected to come out in the summer," says Susumu Sakamoto, a company spokesperson. "It's difficult to say how much the prices are going up, but it is likely to be between [$185] and [$225]."

Other companies are cautiously watching the components market. Among them Tokyo's Fujitsu, Gateway, based in North Sioux City, South Dakota, Houston's Compaq Computer and Beijing's Legend Holdings all said they are still studying whether or not to raise prices.

Since PCs are made of many commodity products and fierce competition exists in most sectors of the market, exact forecasting is difficult even for PC makers.

"We hope this is temporary but we don't know what the component pricing in the industry is going to bring," said Jobs in Tokyo. "We don't know long this will last."

Memory Prices Moving

Already, the memory chip price is on the move again, this time in the opposite direction. Memory chip prices have been falling for the last month, says Clive Ong, an analyst in Singapore with memory market watchers ICIS-LOR, although they are still much higher than they were at the beginning of the year.

"I think the high was about $4.50, in early March, for a 256 megabit [Synchronous DRAM chip], and today it is only about $3.30," he says. The price has begun falling because the second quarter is traditionally quiet and so traders have been looking to unload memory they have in stock rather than keeping current inventory levels.

"They have been selling whatever inventory they had during the month of March and that is why we saw a steady decline in prices week after week," says Ong. "From what I have discussed with people in the market in Asia, they see Q2 as weak. A lot of the traders, brokers and distributors tell me in the coming weeks they will probably see another 5 percent decline in the spot prices."

As unwelcome as price rises are, users would also do well to remember the net price drop that has taken place over the last 18 months, says Bob Page, a spokesperson for IBM.

"In terms of the stand alone memory on a real dollar basis, 128MB of memory is $80 now and was probably more like $30 or $40 in December. However, that same memory 18 months ago was $230."

Sumner Lemon, Kuriko Miyake, Ashlee Vance, Scarlett Pruitt, and Sam Costello of the IDG News Service contributed to this report.