From IBD
--
A ‘Low Cost' Personal
Computer Need Not Be A
Low-End Machine
Date :12/01/1999
Author :Nick Turner
Copyright :Investor's Business Daily
Expect to see a lot of baiting in computer-store
circulars this holiday season.
Personal computers that are nearly free-after
rebates and tie-in offers, that is-stand to be
attention-grabbers.
But will shoppers actually buy the low-end
computers that are the core of these specials? Or
will they opt for machines with a little more
power?
To hear PC makers tell it, there are plenty of
reasons to buy up this year. Features such as
recordable CD-ROM and digital video disc players
are available only on higher-end models.
And while prices on low-end PCs have plunged,
the decreases for high-powered machines are just
as dramatic.
Top-of-the-line computers that would have sold
for $3,500 just a couple of years ago now go for
less than $2,000.
"Consumers are getting a lot more computing
power for their money," said Leslie Adams, vice
president of consumer marketing at Compaq
Computer Corp. in Houston.
Compaq computers with the Athlon processor, the
latest chip from Advanced Micro Devices Inc.,
sell for as little as $1,200, Adams says. And that
includes a monitor.
Models with Intel Corp.'s speedy Pentium III
processor sell for a bit more.
Rebates are thought to appeal most to low-end
buyers. But some companies say getting cash
back may persuade buyers to step up to a more
expensive PC.
Officials at Dell Computer Corp. say their home
customers typically budget a certain amount for a
PC. If they get a rebate, it just means they'll
spend more on other computer gear, such as a
printer.
Two sorts of rebates are expected to play a big
role this Christmas. One is the rebate offered by
Internet service providers, such as CompuServe, a
unit of America Online Inc.
The offer applies to buyers of computers from
Compaq, Hewlett-Packard Co., Emachines Inc.,
IBM Corp., Apple Computer Inc. and other major
retail brands. Customers who sign up for three
years of CompuServe service, at $21.95 a month,
receive $400 back.
The rebate has brought down the cost of Compaq
and HP models to $399 or less. And it's made
some Emachine PCs nearly free.
But rebates are not just being used to lure thrifty
buyers. Dell-known for its higher-end
PCs-recently began offering a $400 rebate after
some early hesitation.
The rebate isn't through CompuServe, though.
Dell offers it only on its own Internet service.
The other common type of rebate rewards
customers who bundle their PC with other gear.
Compaq offers up to $150 to PC buyers who also
purchase a monitor and a printer. These offers
help PC makers keep sales up, even as PC prices
drop.
Buy To Fit Needs
Analysts say bundles can be a good deal-but only
if you planned to buy all of the components
involved.
Bargain-basement PCs are likely to be hot sellers
this Christmas. But officials at Dell, the No. 1
U.S. seller of PCs, say the cheapest computers
may eventually lose their luster.
"There are always opportunities for manufacturers
that compromise on quality or customer service to
somehow get a lower price and maybe get some
market share," said Klee Kleber, director of
consumer marketing at Dell.
"But over time, customers-especially second- or
third-time buyers-will look at the whole value
proposition," he said.
According to analysts, the value of higher-end
PCs depends on how you plan to use your
computer.
The latest video games require a fair bit of
processing power. Here a Pentium III or Athlon
machine often is worth the extra money.
New audio and video uses also require newer
equipment. A CD-RW drive, which lets you
record and rerecord compact discs, is popular for
making song compilations.
And if you plan to play movies or music on your
machine, you'll want a DVD player, a big monitor
and good speakers. Cheap PC makers often skimp
in those areas. |
