Your point on price erosion was also broached at the end of this article. By checking the various sites it is readily apparent that 'basic' 450mhz machines are rapidly approaching the 2k level. With AMD's 400mhz K6 out, and with faster AMD chips coming down the pike, it's hard to see this trend reversing, unless Intel's Katmai becomes the 'must have' high end chip next year. Till then, down we go...
November 27, 1998
Designers Differ On Future Of Sub-$1,000
PC
Filed at 1:23 p.m. EST
By Mark Carroll for EE Times, CMPnet
With the peak of the consumer PC-buying
season at hand, OEMs are divided over the
future of the famed sub-$1,000 consumer PC.
Some OEMs say at $599, price points have
bottomed out and engineers will now move back
to a more familiar scenario of bundling ever more
features into new models at the lower price
points. Others foresee the dawn of a family of
even lower-cost dedicated information appliances
on the near horizon.
"The demand for lower prices is slowing, and that's good for all of us,"
said Jan Janick, vice president of development for IBM's client PC
systems. "There are less and less places where you can take cost out of a
PC."
Janick should know. IBM made hay this year with a $599 consumer PC.
It hit its low price point largely by building in trailing-edge components
such as a Cyrix M II processor, a 3.2-gigabyte hard drive, using fewer
expansion slots, and by integrating audio and modem circuitry.
"There's not a lot left on the board," Janick said. "The price points are
here to stay, but now we will start putting new capabilities into these
price points. That's the new trend."
Simon Lin, president and CEO of Acer, based in Taipei, Taiwan, agreed
to a point. He sees the functionality of the PC as more important now
than strictly price. However, Acer has long been a proponent of the idea
of sub-$400 dedicated-use machines.
"Our 'XC' machines will be in the marketplace in the late first quarter,
early second quarter of 1999," said Lin. "Our focus for these $300
machines isn't so much cost, but performance."
Acer's XC program envisions dedicated machines for specific tasks such
as commerce, education, and entertainment. In fact, Lin foresees a
limited future for the standard PC. In the future, he said, it is "quite
possible" PCs as we now know them will not be a viable product.
Acer is considering using Windows CE or another operating system in its
XCs, said Rick Lei, general manager for Acer's consumer
products/information products group, but otherwise, the hardware will be
fairly standard, if streamlined, PC parts.
"We will use different mainboard form factors as well as different
software and component configurations for each of the different XC
products, said Lei. "Significant costs can be saved by using small,
bare-bones mainboards with just the necessary components.
"Our entertainment XC will have a mainboard with only the necessary
CPU, graphics functions, an x20 CD-ROM, and game-controller I/O,"
said Lei. "The CPU will not be an unusual component, but rather a
standard X86 CPU."
By contrast, Acer's commercial XC -- a network terminal -- will use
Ethernet and possibly a smart card interface. An education XC may build
in a floppy drive and a low-cost, low-power 25-watt power supply.
At the $500 level and below, Acer's Lin sees ease of use being an
important feature. "Ease of use plus the functions offered are key," said
Lin. "Price is the third consideration. For the OEMs the ability to cut the
cost of sales and service is essential. That means the PCs must be easy to
use."
Acer was one of the first to pioneer the $500 PC. "Two years ago, when
we introduced the Acer Basic at $500, we had to sacrifice functions,"
said Lin. "Now it is possible to offer a full-function product at that price
point. It's not the price point that is so important. What is important is full
functionality can be met at a low price point."
Acer does not make a sub-$500 PC for any of its OEM customers, but
First International Computer (FIC) does. And that company suggests
there are significant trade-offs -- including profitability-- to be made at
such a low price.
"Our basic bill of materials is about $350," said Jason Kuo, OEM sales
manager at FIC. "That's $100 for a motherboard with on-board audio
and video, $100 for a hard drive, and $150 for a Cyrix MediaGX and
32 megabytes of memory. An AMD K6 is too expensive, much less an
Intel solution."
Other CPUs like those from IDT and Rise are not yet popular in Taiwan.
Kuo said FIC is not using IDT's CPU "yet." Some smaller Taiwanese PC
vendors are, however.
"We do have some customers who are using IDT's CPU with our MPV3
or MPV4 core logic," said Sean Davidson, marketing manager at Via
Technologies. "Both core logic chip sets support any company's Socket
7 CPU. The difference is the MPV4 has integrated hardware video and
software audio and modem support."
CPU price is now but one factor for would-be sub-$500 PC makers.
"As the OEMs squeeze us on price, we must go back to all our vendors,"
said Kuo. "We are spending more time developing suppliers now. We
are relying more and more on components from mainland China."
The move below $400 is now the level where major trade-offs need to
be made. "At below $400, a Windows 9X solution just isn't possible,"
said Kuo. "You have to begin then looking at Windows CE." At least
one major CPU vendor agrees. "Any PC below $400 has to go to CE,"
said Stan Swearingen, vice president of marketing at Cyrix. "At that price
level, Windows 98 is the most expensive component."
A top engineer at another U.S. PC company took a different view. He
said the real business crunch for PC makers these days comes not so
much from the limbo dance on prices for the low-end systems, but from
the collapse of prices for high-end consumer systems.
"Last year, our top-of-the-line system cost $2,700, but this year, the
high-end model sells for $2,080," said the engineering manager, who
asked not to be named. "Our overall ASPs [average selling prices] went
down 150 percent in the last two months, and we in the direct market
haven't seen the end of this yet." |
