Mobile Pentium II Processors Could Lift Average Prices
(04/06/98; 2:37 p.m. EST)
By Gregory Quick, Computer Retail Week
With notebook computer prices in a tailspin, vendors
and retailers welcomed the introduction of mobile
Pentium II processors Thursday as a precursor to
higher average sales prices, which promise higher
revenues and profits.
Average advertised prices for notebook computers
have fallen $300, or 15 percent, between February
1997 and February 1998, according to Beyen, an
ad-tracking company based in Niagara Falls, N.Y. At
the same time, the percentage of notebook computers
advertised for more than $2,500 has been sliced
almost in half from 27.8 percent in February '97 to
15.2 percent in February '98.
"We definitely need these systems to get our revenues
and profits up," said one merchandise manager for a
New York-based retailer.
"I can't imagine how it could not affect prices," said
Stephen Baker, senior analyst at PC Data, in Reston,
Va. "There's nothing in the $3,000 price range today."
According to PC Data, only 6.7 percent of notebook
unit volume in February came from systems costing
more than $3,000, and many of the latest introductions
from Fujitsu PC, Hitachi, Toshiba America, and
Compaq have been coming in the sub-$2,000 price
range. Most of these companies have also been
slashing prices recently in advance of the Pentium II
announcement.
Some analysts discounted any immediate impact from
Pentium II-based notebook computers because of the
strength of low-end systems sales.
"The bulk of the [mobile] market sales has moved to
entry-level and midranged systems," said Mike
McGuire, senior analyst with market researcher
Dataquest, in San Jose, Calif. "The high end has
become a much smaller segment of the overall mobile
market in the past few years. There will be some
impact, but the overall effect will probably be small."
While vendors said Intel Pentium II-based notebook
computers would not soon be reaching retail stores,
retailers indicated they intend to be at the head of the
line for their allocations, whether they bought directly
or indirectly.
Urban retailers were particularly bullish. "We already
have our orders in," said Ahron Schachter, vice
president and general manager of DataVision, a New
York retailer. "With the combination of the SOHO
[small office/home office] and Fortune 500 [in New
York] buying from retail, there will be demand for the
products."
Schachter discounted the idea that the retail market
was not ready for the powerful systems, which are
expected to hit shelves next month in volumes ranging
from $3,000 to $5,000. He said he anticipates no
more than the usual problems associated with selling
new products.
A sales associate at Fry's Electronics in the San
Francisco Bay Area is predicting early sales. "We
have a set of customers who always want the
top-of-the-line products, so there will be demand for
them."
Discussions with retailers nationwide revealed similar
sentiments, with the exception of those in rural areas.
Retailers in smaller towns forecast a lesser need for
the expensive systems right now.
"Our customers are very happy with the Pentium 233
[MHz] with 32 megabytes," said Phil Thompson,
computer department manager for Wolfe's Cameras,
Camcorders and Computers in Topeka, Kan.
Thompson said his market was much more
price-sensitive, and it would be a while before these
systems came down into an acceptable range.
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