From...

December 17, 1999
Web posted at: 1:06 p.m. EST (1806 GMT)

by Tom Mainelli

(IDG) -- A "cheap" PC from most major vendors will likely cost more today than it did a few months ago, thanks to volatile memory prices and the exodus of several key players from the low-end market. But you can still find bargains: eMachines in particular bucks the trend, still selling its $399 PC.

Major vendors Hewlett-Packard and Compaq both offer systems in the very low-end retail market, and both have raised their bottom price point since summer, says Stephen Baker, director of hardware analysis at PC Data, which tracks retail PC sales.

Blame the price increases on fluctuations in memory prices, as well as vendors' perception that $499 PCs don't sell significantly better than those priced at $599, Baker says. By raising the price a small amount, a vendor can offer a better PC, give a better value, and make a little bit more money, he says.

MORE COMPUTING INTELLIGENCE

IDG.net home page

Top 15 home PCs for January 2000

Picturing the PC of 2020

Blue Gene, a super computer for the history books

E-BusinessWorld

Reviews & in-depth info at IDG.net

IDG.net's personal news page

Year 2000 World

Questions about computers? Let IDG.net's editors help you

Subscribe to IDG.net's free daily newsletter for computer geniuses (& newbies)

Search IDG.net in 12 languages

News Radio

Fusion audio primers

Computerworld Minute

Plus, with IBM pulling its Aptiva systems out of retail stores and NEC folding the Packard Bell tent, fewer low-end options are on store shelves, he says. This gives others room to reposition their products and price points, he says.

Still Some Bargains

And while the allure of the summer rebates has faded a bit with age, they're still available to buyers willing to commit up to three years to an Internet service provider, he notes. So even if price tags are inching up, you can still take home a PC for very little cash up front.

HP has indeed increased the price of its entry-level Pavilion PC, says Ray Aldrich, an HP spokesperson. As recently as September, you could buy a Pavilion for $499 (after a $50 HP rebate). Today, the company's entry-level model 6535 Pavilion costs $549 (after a $50 HP rebate). The current system has a 466-MHz Celeron processor, 64MB of memory, an 8GB hard drive, a 40X CD-ROM drive, and a 56-kilobits-per-second modem, but no monitor.

A $499 system from HP was a short-lived product, Aldrich says. The price of the 6535 Pavilion reflects changes in memory prices, and it lets HP offer a high-quality computer while making a profit.

It's very difficult to make money on PCs priced lower than that, he says, and a company such as eMachines is "probably losing money on that $399 deal."