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Technology Stocks : Disk Drive Sector Discussion Forum -- Ignore unavailable to you. Want to Upgrade?

To: tom pope who wrote (1718)	12/8/1997 2:20:00 PM
From: Gus	Read Replies (1) \| Respond to of 9256

As Sub-$1,000 PCs Appear in Time for the Holiday Season, Study Shows Lower Priced PCs Unlikely to Lure Enough New Customers PC Industry Unlikely to Attract Enough New Consumers to Make Up For Reduced Profit Margins SAN FRANCISCO--(BUSINESS WIRE)--Dec. 8, 1997-- This holiday season, PC manufacturers are offering consumers a full-featured PC priced under $1,000 for the first time. While lower prices will bring more buyers, it is unlikely that the sub-$1,000 PC will attract the large number of new customers that PC manufacturers need to see. Odyssey research reveals that lower prices are unlikely to lure enough consumers who had not already planned to purchase a PC. The data indicates that a maximum of 1.5 million more PCs will be sold at the sub-$1,000 price than would have been sold at traditional, higher prices. Odyssey is the nation's only independent market research firm dedicated exclusively to studying consumers, technology and at-home information and entertainment. According to Odyssey President Nick Donatiello, the success of the sub-$1,000 PC depends on its ability to attract new customers, since the lower price point necessitates greater sales volume to make up for reduced profitability. These numbers, then, should cause concern among PC manufacturers and PC retailers. ''There is no doubt that these new systems are selling. The PC does not defy the laws of economics; lower the price and more will be sold,'' said Donatiello. ''But, it's clear that PC manufacturers won't be able to attract enough new customers to compensate for the reduced profit margin.'' "Unfortunately for the manufacturers who produce these models and the retailers who sell them, value not price is the primary sales driver," added Donatiello. "When it comes to PCs, more consumers want the latest technology, protection from quick obsolescence, and computers that are easy to use than want just a low price." Odyssey's research reveals that consumers would prefer to pay more for a PC with the latest technology than spend less on a PC that might not perform as fast or be able to run new software programs that come out a few years from now. In fact, 69 percent of consumers said they would rather pay extra for the latest options; only 20 percent of respondents preferred the lower cost option. And, since Odyssey research indicates that consumers who are extremely likely to purchase a PC this holiday season expect to spend an average of $1,999, the sub-$1,000 PC may be little more than a thorn in the side of manufacturers and retailers. "Many consumers walking into the store expecting to pay $1,999 are going to walk out having paid under $1,000. Most probably won't even know they bought year-old technology, and they'll be happy. Not so for manufacturers and retailers," said Donatiello. "All they are doing is lowering the average sales price. They will not attract enough new customers to make that reduction worthwhile." PC purchasers -- even those who prefer lower-priced options -- demand a large array of features. Those consumers who prefer the sub-$1,000 PC and either have a PC at home or are likely to purchase a PC in the next six months were asked which features they feel are essential for any computer they purchase. Of the ten features measured, nine were required by a majority of potential buyers. At least 75% required "a CD-ROM drive," "at least 1 GB of disk space," "ability to access the Internet," "32 MB of memory" and a "Pentium processor." More than half also required "the fastest modem currently available," "a large monitor," "a lot of preloaded software" and "the ability to run the latest computer games." Only a "Pentium processor with MMX" was not seen as essential by the majority of respondents. Manufacturers, therefore, will need to load the sub-$1,000 PC with features common on more expensive models if they hope to move them off showroom floors. "Consumers that plan to purchase a computer expect to pay -- and would have paid -- more for the features they want, so manufacturers are leaving money on the table," continued Donatiello. "With sub-$1,000 PCs, manufacturers have ripped the floor out from under their price position, probably unnecessarily -- and they won't get the number of new customers that will make this strategy a winning one......" biz.yahoo.com