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PC prices continue to tumble

PC prices continue to tumble

In what may be an industry trend of bringing commercial PC prices more in line with lower consumer PC prices, Compaq announced last week its lowest cost commercial desktop to date, and Dell cut prices on its Optiplex desktops.

However, consumer PC prices are far from stabilising. Last week eMachines, a year-old entry into the consumer market, announced a deal with America Online that essentially means AOL will underwrite the cost of the PC to gain subscribers.

Starting this week at Circuit City and Office Depot stores, eMachines will offer one of three tower configurations: a $US599 model using an Intel Celeron 366-processor, 4GB hard drive, 56Kbps modem, and a DVD-ROM drive; a $US499 model with a 400MHz Celeron similar in configuration to the $US599 but with a CD-ROM drive instead of a DVD and a $US399 model which uses a Cyrix processor.

Buyers willing to sign up for a three-year subscription to AOLs Compuserve 2000 service at $US21.95 will receive in return a rebate check for $US400.

In a session at PC Expo in New York, titled "How cheap should a PC be", a Hewlett-Packard executive questioned the wisdom of giving away PCs.

"The question is, free to whom? It may be free to the consumer, but it is basically a business model that subsidises a PC, and there is a question there of sustainability. Is the value compelling and is the business model sustainable," said Web McKinney, vice president and general manager of HPs business PC organisation in Palo Alto, California.

On the business end of desktop computers, prices from enterprise suppliers are dropping, although not below the $US800 level as yet.

The Compaq Prosignia Desktop 320 announced last week includes a 400MHz Intel Celeron processor, 32MB of Synchronous DRAM (SDRAM), a 6.4GB hard drive, a 32-speed CD-ROM drive, and even a 13 inch monitor for $US899.

In the meantime, Dell cut prices by as much as 17 per cent this week on its OptiPlex desktop line. AnOptiPlex G1 with an Intel Celeron 400MHz chip, 32MB SDRAM, a 4.3GB hard drive, a 17-speed CD-ROM drive, and integrated 3Com ethernet10/100 networking was reduced 13.9 per cent from $US927 to $US798 without a monitor. A 15 inch monitor from Dell will add $US179 to the cost.

According to HP's McKinney, consumer prices for PCs, at least when they are not being given away, and commercial prices could soon be at parity.

"We could see the same price range coming soon on the commercial side for PCs that we are currently seeing on the consumer side," said McKinney. www.aol.com. www.compaq.com.www.dell.com. www.e4me.com.


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