No postholiday PC bargains expected yet

From...

by Tom Spring

(IDG) -- Looking for a postholiday deal on a new PC? Think again. PC prices are holding steady and in some cases heading north, based on figures from major manufacturers such as Micron Electronics, Hewlett-Packard, and Dell, and at CompUSA's online mall.

Apple Computer is the big exception to price trends, making deep $1,000 price cuts in Power Mac G4 desktops and PowerBook G3 laptops. But despite the buzz that PC prices were set to tumble in a postholiday fire sale, pricing isn't headed south -- yet.

Bargain hunters might want to wait a little longer before forking over a few grand for a new PC, experts say. Preholiday sales designed to lure new buyers to offset sluggish sales are over, and prices have returned to preholiday highs.

Price cuts? Not so fast

The best deals were about two weeks ago. For example, a micronpc.com desktop PC costs you $50 more today than it did on December 24 during a holiday sale. Micronpc.com notebooks cost an average of $78 more. Dell Dimension desktop system prices snap back to preholiday heights on Thursday, when a $100 sale ends on home systems. A similar $100 sale ends on January 18 on Dell's Inspiron notebook line.

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Pricing on Gateway PCs and notebooks are staying put, says Beth Etler, a Gateway representative.

Most HP system prices are holding steady, except for a few models that have gotten pricier. HP has dropped the price of its 850-MHz Pavilion 8756c Pentium (with 128MB of SDRAM, a 30GB hard disk, and CD-ROM). It was going for $1,099 and now costs $999. In December, HP's cheapest Pavilion cost $599, which bought you a Celeron-667 model with 64MB of memory, a 20GB hard disk, and a CD-ROM drive. Now, the cheapest Pavilion costs $649, with a 700-MHz Celeron and identical specs.

That's nothing compared to prices that have ballooned by as much as $300 at CompUSA's online store. After Christmas, CompUSA tacked $300 onto the Toshiba Satellite 2805-S401, bringing it to $2,499. It also pumped up the price of an HP Pavilion 8766C Minitower by $200, so the postholiday cost of the 933-MHz PIII system is $1,299. You'll pay an extra $200 for the Pavilion 8776C Minitower as well.

However, CompUSA's online store has shaved $50 off the price of an HP Pavilion 6746C Minitower through a mail-in rebate, dropping the price to $699 for the 733-MHz system. It also has sprinkled $100 rebates throughout its Web site. For example, the Toshiba Satellite 1715XCDS notebook can be had for $999.

Price war imminent

Despite flat and rising PC prices, analysts agree prices will soon dip. PC pricing hit rock bottom in December 2000, says Stephen Baker, vice president of technology products research and analysis at PC Data.

Unit sales in both retail and mail order declined 24 percent in December from a year ago, according to PC Data researchers. That's the largest year-to-year decline ever, they say.

That's because the industry is in flux, shifting from a growth market to one of replacement buys, says Roger Kay, an analyst with IDC.

PC Data analyst Baker agrees.

"There need to be compelling reasons to replace your PC," Baker says. "And right now there aren't any."

It may take time for PC makers to adjust to a tighter market. But analysts say PC prices will drop when dealers start seeing systems gather dust on the shelves.

Consumers are waiting for a blockbuster service or application, such as the availability of high-speed Net access, to take them to a higher level of computing before they upgrade again, analysts add.

PC prices waned in December, but they fell nowhere near the drastic reductions analysts had predicted.

Compaq lists on its Web site several rebates and discounts that extend into February. The company is also trying to tempt potential customers with extras like a spare notebook battery or free printers with the purchase of certain models.

Similarly, Dell is retaining a December bargain on its Latitude CS UltraMobile notebook. Dell took 20 percent off the price of a PIII system with 128MB of memory, bringing it to $1,599.

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Micron Electronics
Hewlett-Packard
Gateway

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