AST Slashes Prices on 6 Computer Models : Competition: The company hopes to increase its share of a market dominated by giants like IBM, Compaq and Apple.
Striving to hold onto its share of the market, AST Research Inc. on Wednesday slashed prices on six models of its personal computer line.
The price cuts, ranging from 13% to 32%, will allow AST to remain a viable competitor with industry leaders like International Business Machines Corp., Compaq Computer Corp. and Apple Computer Inc., analysts said.
The price cuts affect three models each of the Bravo and Premium II 386SX/20 personal computers, which are described as middle-level machines. The price of AST’s lowest-priced model affected by the announcement, the Bravo 386SX/20, drops to $1,295, down $600.
PC prices have been falling since the start of the year, with Compaq and Toshiba America Corp., a leading seller of portable laptop PCs, making the most recent cuts. AST officials said the move is aimed at increasing market share and putting the squeeze on IBM and Compaq, its primary competitors for IBM-compatible PCs.
“We have 5% to 6% of the U.S. market share. If we take a complacent posture, we will stay in this position for a long time,” said Thomas C.K. Yuen, co-chairman and co-founder of Irvine-based AST. “I think this is the best time for a very strategic move.”
AST has remained profitable, he said, although industrywide price cutting has left some PC makers weakened. By cutting prices further, AST will achieve retail prices lower than those charged for similar machines by mail-order retailers with low overhead costs, Yuen said. Dell Computer, for instance, has been particularly successful in mail order.
“We want to provide very high quality and very good pricing,” Yuen said. “If we don’t do this, the Japanese will kill us. Look at the television industry, which stayed lofty and complacent while the Japanese companies started taking over their market share. We in the computer industry can go the same way as the TV industry if we don’t compete.”
Analysts generally applauded AST’s move.
“I think AST wants to maintain its price-leadership position,” said Benny Lorenzo, an analyst for Dillon Read & Co. in New York. “The cuts were a little bit more than I expected, for sure, but not out of line.”
Daniel C. Benton, an analyst for Goldman Sachs & Co. in New York, said AST was bringing its prices back in line against those of Compaq and IBM. “They not only responded, but preempted” the competitors by making its prices even lower.
“This company is on a roll,” Benton proclaimed.
Lise Buyer, an analyst for Cowen & Co. in New Yok, said the pricing was probably a move leading up to the Comdex computer trade show in October. She said companies often discount their older models before the show so they can unveil new, fancier products with higher price tags.
AST’s Bid for Market Share
AST Research cut prices on six personal computer models from 13% to 32%.
New Price Old Price BRAVO 386SX/20 1.4-megabyte* floppy disk $1,295 $1,895 40-megabyte hard disk, floppy 1,695 2,395 40-megabyte hard disk, floppy, 2,395 2,895 software, mouse, monitor PREMIUM II ** 386SX/20 1.4-megabyte floppy disk 1,595 1,995 80-megabyte hard disk, floppy 2,095 2,495 210-megabyte hard disk, floppy 2,595 2,995
* A megabyte refers to the size of a computer’s memory. A 40-megabyte hard disk drive can store approximately 40 million characters.
** AST Premium II is designed to accept plug-in upgrade modules with faster processors.
Source: AST Research
