COMPUTER MAKERS FEEL CRUNCH OF COMPETITION : RACE TO STAY CUTTING-EDGE HAS LED TO BIG REDUCTIONS IN COST OF OLDER MODELS.

Byline: Dawn Yoshitake Daily News Staff Writer

When it comes to pricing, computers are a lot like cars.

As the new models roll out, prices drop on the older ones.

But this year, computer discounts are steeper than in previous years, industry analysts and officials say.

And as computer makers unveil another round of their latest systems, consumers can expect more price slashing and additional gizmos like memory stuffed in the older models.

``PC prices will drop more on a percentage basis in 1996 than in past years. In March, Compaq cut its prices to meet internal sales goals. IBM, (Hewlett Packard) and Digital all followed suit. In May, several leaders cut prices again. . . . (and) these price wars will render 1996 decreases greater than in past years,'' said Daniel Newmark, a research analyst with Find/SVP Inc., a New York-based research company.

This year, for example, the price of a Compaq Presario with a 133 microprocessor fell 28.6 percent within six months after its January introduction.

But in 1994, a Presario with a 486SX2/66 microprocessor held its price at least six months following its introduction, based on a spot check of prices.

A drop in component prices, heated competition with more players in the market, excess inventory that emerged in 1994 and a faster turnaround on launching new products have contributed to the price-cutting, industry analysts and officials say.

Consumers who've been lusting for a computer and waiting for prices to fall have seen prices drop 50 percent or more on some models during the course of a year.

Computer City, for example, carries a Pentium 100 for $1,299, whereas a year ago a computer with that speed sold for $2,999 - a 56 percent decrease.

``New products are what drops prices on older systems. . . . and product launches have tended to come in late June and July,'' said Jim Hamilton, general merchandising manager for Computer City in Fort Worth, Texas.

He added retailers usually knock down prices on older models 30 to 40 days before a new product is released, in order to move merchandise and free up precious shelf space.

``After a big product introduction, prices on that product (tend) to stay constant unless the manufacturer sees it isn't moving. And it also depends on who's entering the marketplace,'' Hamilton said.

And new product releases have come at a faster pace since last year, when chip-giant Intel Corp. began spitting out speedier versions of its Pentium microprocessor chips, said Robert Straus, research analyst for International Data Corp. in Boston, Mass.

``This is putting pressure on computer makers to make product advancements in a shorter period of time,'' Straus said.

Prices on random access memory (RAM), meanwhile, have tumbled four-fold in retail stores to around $40 for 4 megabytes, compared with last year when prices hovered around $170.

``There were supply constraints on memory last year and manufacturers tried hard to add more capacity. And that capacity came on line in December through February,'' said Dean Kline, a spokesman for Texas-based Dell Computer Corp. ``It becomes more of a supply and demand equation and that drives the price down.''

And hard drives, meanwhile, have continued their steady march toward offering more bang for the buck, said Phil Devin, an analyst with Dataquest, a San Jose research company.

Over the last three years, hard-drive capacity has grown at an annual rate of 60 percent, while prices have dropped about 40 percent annually.

This translates into 12 cents a megabyte from 25 cents a year ago, Devin said. And based on this continuing trend, the price could fall to 10 cents a megabyte by the end of the year.

How does this translate for consumers? A gigabyte that currently runs for $199 in retail stores may drop to $100 in the next 12 months, Devin said.

Two issues are largely driving this increase in storage at a lower price. One is a growing appetite for storage among users and the second is consolidation of an industry that hopes to attract more customers via price slashing.

Meanwhile, printers also have had their share of price cuts. Color-ink jet printers have undergone a 50 percent price reduction over the last 18 months, Hamilton said. A typical printer used to sell for $300, and now retailers are moving them at $150 to $180.

Dan Crane, marketing vice president of Torrance-based Epson America Inc., said competition among makers of computer printers has grown during the past 12 months.

``The competition forces the prices to drop,'' he said. ``And that brings more consumers into the market. As an economist predicted, as volume goes up, we can spread our fixed costs and lower prices.''

CAPTION(S):

Chart, Photo

Chart: (Color) HOW MUCH ARE YOU WILLING TO PAY?

More consumers were willing to shell out $1,500 or more for a computer last year, than in the previous year. And the biggest gain was seen in the $3,000 and above price point, according to an IDC/Link Home Media Consumer Survey that tallied results among 2,500 respondents.

Drawing: (Color) No caption (Computer)