Price War Continues
Look for the global price war to continue, Citbank analyst Kirk Yang said. The market for PC sales grew five percent last quarter.
The average selling price of PCs will drop to $867 this year, down from $960 last year, and from $1,260 just four years ago, according to Gartner .
Computer makers -- from Dell (Nasdaq: DELL) to Hewlett-Packard (NYSE: HPQ) to Lenovo -- are controlling costs.
Researchers at Merrill Lynch predict that Lenovo, for example, will cut operating costs from 11.4 percent of sales to 11 percent this year and to 10.8 percent in 2008. They, and others, are now really making money on lower-priced PCs. Businesses are buying up the lower-cost computers in ways that have not been seen in years, and, which in some ways, match the growth in spending in wireless and networking technologies.
We may be expected to continue to see this surge in spending, as smaller companies now purchase the cheaper computer products and attempt to compete with larger firms, with computer-based productivity gains. Contrary to what many technology gurus of the 1990s, including George Gilder, had predicted, turning computers into a commodity has boosted the technology business -- and sales of computers across the economy.
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