Channeling Sales

Interesting article in the NY Times the other day, talking about falling prices in the PC market.  These articles show up every few months as industry outsiders struggle with the concept of continuous falling prices.  This year has seen some exceptional price declines as vendors and retailers compete to gobble up unit volume.  However, as always the sensationalism of journalists wants to declare these falling prices as a “price war” and declares that products are being sold by retailers as “loss leaders” to drive traffic. 

Bah, no retailer I have known in the past 10 years, as retail professionalized and markets stabilized would ever start a price war, nor do retailers sell stuff below cost.  Especially not one of the two or three most expensive products in their store.   And why would they need to price PCs below cost to drive customer traffic?  Why not sell TVs below cost, that would drive a lot more traffic, in addition why do they want to drive traffic to their PC department, unquestionably the lowest margin segment of the whole store? 

But let’s all jump and down and declare “price war” because it is easy and expedient, hopefully in the future we would see more nuanced stories and commentary on the consumer PC market but given the quality of most analysts and reporters out there I don’t have a lot of hope.