Study: Americans snapping up low-cost PCs
By Stephanie Miles
Staff Writer, CNET News.com
September 29, 1999, 1:25 p.m. PT
Reports of the death of the personal
computer have been premature,
according to a new report, as PC sales
made significant gains last month amid
steadily dropping prices.
PC sales skyrocketed last month, driven
by the popularity of very cheap computers, a slew of novel rebate deals, and
more lower-income households joining the party.
Although sales are historically strong at the end of the summer because of
back-to-school sales, this year the sales surge was huge: August retail PC
sales jumped by 42 percent compared to the same month a year ago,
according to retail market research by Infobeads.
"It looks like 1999 will be another banner year for the home PC market,"
wrote Dave Trembly, an Infobeads analyst.
Sales have also driven up the number of homes that now have PCs. By the
end of 1995, 38.5 percent of U.S. homes had PCs. Now, 52.7 percent of
homes have one or more PCs, according to an Infobeads estimate.
"There are about 2.9 million more PC households in the middle of the year
than there were at the beginning," Tremblay added. "That's more than were
added in all of 1996."
The news in many ways validates the "PC-ISP" concept: offering Internet
access with the purchase of a PC,
or the other way around. In the
past, consumers bought PCs and
then independently sought service
from an Internet service provider--a
potentially frustrating task.
But starting last year, and
increasing dramatically this year,
PC companies are to teaming up
with ISPs to sell their products
together in one neat package,
often with huge discounts.
Making the customers happy
The combinations and
complementary discounts in many
instances lead to lower profit
margins for PC makers, analysts
have said, but the deals have
clearly struck a chord with the
buying public.
Still, all is not rosy for PC retailers:
The strong sales were mainly a result of the unstoppable popularity of cheap
computers. The emphasis on low prices--and the increasing popularity of
cutting the middleman out entirely by using direct PC makers like Dell
Computer and Gateway--is resulting in lower profits for computer stores.
Computers priced under $600 made up 47 percent of all desktop computers
sold by retailers in August, and for the first time, the majority of PCs were
under $800. Only three years ago, the average selling price of a PC was
$1,800.
Rippling effect
The price trends affected the standings of PC makers, as well. For the first
time, Hewlett-Packard leapfrogged past the beleaguered Compaq Computer,
which has held a tight grip on the retail market over the last few years. HP,
which has embraced an aggressive pricing strategy over the past few years,
took 35 percent of the retail market, with its unit sales increasing a staggering
86 percent compared to last year. The Infobeads study does not track direct
PC sellers like Dell and Gateway.
Compaq and Emachines rounded out the top three spots with 29 percent
and 14 percent of the market, respectively. Eighteen months ago,
Emachines was not even a top-five retail brand.
Rising popularity also seems to discount the theory that so-called
information appliances are eroding the popularity of the garden
variety computer.
"There is no computing-appliance-induced slowdown in PC
penetration visible yet," the report stated. "We may not be able to
say the same in a few years, but for now, the PC reigns and
continues to pick-up new households.
And, for the sociological inclined, these numbers indicate that the
PC has broadened its user base beyond the affluent and elite,
Infobeads added. Middle- and lower-middle-class households are
embracing cheap computers, which is especially good news for PC
makers, because the high-end market was nearing the saturation
point, meaning that sales to higher-income individuals have been
slowing. At the same time, lower-income households are still a
relatively untapped market.
In addition, households buying their first PCs are more likely to buy
software, peripherals, and services than repeat buyers, the report
states.
Related news stories
• "Free PC" offers boost June sales by 35 percent July 22, 1999
• Another gloomy sales report for PC retailers September 1, 1999
FREE Newsletter
sample >
News Options: One Week View | Send us your news tips | Desktop News | Advanced Search
Click to see how HP will help you work without a wire.
Contact us | Member services | Help |
