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Intel tells Japan to cut PC prices

Lower prices will boost sales, Intel tells Japanese computer makers.

Intel (INTC) has recommended that major Japanese personal computer makers ought to cut their prices to stimulate the market, industry sources are reportedly saying.

The world's leading chip maker, with 80 percent of the global market, slashed its prices by as much as 50 percent at the end of July, but local hardware prices have not fallen and Intel is purportedly concerned by decreasing microprocessor shipments to Japan, according to the Nihon Keizai Shimbun, Japan's largest business daily.

"High prices are a problem in Japan. The fact that prices have not fallen is one of the reasons the consumer market in Japan is sluggish this year...The Japanese market demand has not been very good the last few quarters, and it showed single digital growth this last quarter, says Bruce Stephen, an analyst with International Data Corporation.

"It wouldn't surprise me if they [Intel] were trying to jump start the market with some suggested actions," added Stephen.

After first attributing sluggish Japanese sales to a consumption tax hike that went into effect in April, Intel concluded the sales downturn owed instead to high PC prices since the second half of 1996.

Intel calculated a price cut of about 30,000 yen per computer (roughly $250) would boost sales while bringing retail prices here more into line with U.S. prices, according to the Japanese newspaper.

While Intel does not release shipment figures for the Japanese market, a company representative said processor shipments increased in the April-June quarter by 10 percent from the previous year's level but are likely to be down for the July-September term.

Intel is an investor in CNET: The Computer Network.