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IBM Gives Discounts To Dealers On PCs

July 10, 1986

NEW YORK (AP) _ International Business Machines Corp. is trying to stem the erosion in its share of the personal computer market by giving discounts to dealers on some models, analysts said.

IBM confirmed Wednesday it was promoting certain models of its basic personal computer and top-of-the-line Personal Computer AT through dealer discounts but declined to be more specific. List prices are unchanged.

″It’s an intelligently conceived cut to enable big dealers to improve their profitability,″ said Paul A.D. Evans, an analyst for S.G. Warburg Inc. in San Francisco.

IBM will sell about 42 percent of the PC-compatible computers shipped in the United States this year, down from 100 percent in 1981, when it introduced its first PC, estimates Dataquest Inc., a San Jose, Calif., market researcher.

With the discounts from IBM, which reportedly range up to 17 percent, dealers can either cut retail prices of IBM PCs to sell more of them, or maintain the retail prices and improve their profit margins.

But the effort to help retailers could be undermined if some IBM dealers pass along the entire discount to customers, forcing others to do likewise, said Norm DeWitt, director of Dataquest’s personal computing service.

IBM spokesman Rob Wilson in Boca Raton, Fla., said the promotions to dealers began around July 1 and will run for a limited time. He declined to say when they are scheduled to expire or how big they are. The mid-sized XT is not included in the promotion, he said.

Computer Retail News, a trade publication, said Monday that dealer prices for the basic PC were cut by $100, to $725 for the single-disk-drive version and to $775 for the dual-drive version. It said the dealer price for a basic model of the AT was cut $400, to $1,995.

IBM’s suggested list prices remain unchanged: $1,895 for a stripped-down PC and $3,995 for a typical version of the AT.

Tandy Corp. Chairman John Roach treated IBM’s cuts lightly in a speech Wednesday at PC Expo, a trade show. Tandy is the second-biggest seller of all types of PC-compatible computers after IBM.

″My only question is, ‘What took them so long?’ They should have been lowered before,″ Roach said. He called it a case of, ″too little, too late.″

The runner-up to IBM in sales of AT-compatibles, Compaq Computer Corp. of Houston, is not especially worried about IBM’s price cuts, either, Rod Canion, the president and chief executive, said in an interview.

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