Thursday, November 29, 2001

Computer industry serious about ‘best time to buy’
Personal computer prices hitting an all-time low
By David Hayes
Knight Ridder Newspapers

I’m having a serious case of digital envy.

People are buying computers all around me, and it’s making me crazy. My angst doesn’t have anything to do with the friends who are buying, or what they’re bringing home. It’s just that all these sub-basement sale prices have given me a serious itch to buy.

The computer industry has made an art form out of telling consumers now is the best time to buy. This time, the industry may not be stretching the truth.

The average price of a personal computer has fallen to an all-time low. According to research firm NPD Intellect, the average sale price for a personal computer during the first nine months of the year fell below $900 for the first time — to $899.

To put that in perspective, in late 1995 an average computer sold for around $2,100.

The price dropped to $1,173 in 1998. By 1999, the price had dropped further, to $984, according to NPD Intellect. And last year, the average price was $957.

At the same time, computers have gotten faster, monitors have gotten bigger, hard drives are virtual caverns and manufacturers routinely add CD-ROM burners.

Sub-$800 computers, an industry fad to lure new buyers three years ago, have been replaced by sub-$600 computers.

For $599, Gateway is selling a computer with a 1.1-gigahertz Intel Celeron processor, 20-gigabyte hard drive, 128 megabytes of random access memory (RAM) and 15-inch monitor. The deal includes Windows XP ($99) and a free year of America Online ($287), which effectively means that the actual computer costs about $212 if you go the AOL route.

Dell is offering a similar deal, although Gateway has the Austin, Texas, manufacturer beat on giveaways (Dell is only offering six months of free AOL service).

For the average user, these are workmanlike computers and terrific deals. For surfing, they will fly across the Web. They will handle office tasks easily.

Seasoned computer users, however, would scoff. Many computer games and some new Internet telephony applications require both sound and video cards — separate components that fit into the motherboard, the heart of the computer. Sound and video elements for the lower-price models are built into the motherboard and aren’t as robust, so some games will run poorly. And neither the Dell nor the Gateway comes with a CD-ROM burner.

Cutting some of those corners is the reason these computers can sell at sub-$600 prices. The components are, for the most part, low budget. To start, they use Intel’s Celeron processor, which is a couple of steps below the Pentium 3 or Pentium 4, which are included in top-of-the-line computers today.