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Penny-pinching shoppers may get PC deals soon
SEATTLE (AP) =E2=80=94 Sales of personal computers didn't live up to = expectations=20 over the summer, and now analysts predict shoppers will cut spending = even more=20 drastically in the all-important holiday quarter.
So far, PC prices appear to be holding steady. But buyers may get = better=20 deals soon as computer companies try to avoid getting stuck with a pile = of=20 unsold inventory on Dec. 31.
Analyst Roger Kay of Endpoint Technologies said the unofficial start = date for=20 holiday PC promotions has crept earlier in recent years. This year, Kay = said,=20 computer makers are feeling panicky and wondering if they'll even make = it=20 through October without slashing prices.
"People with a lot of money are still going to come out and buy = whatever they=20 want," Kay said. "But there's a whole big pack of folks in the middle = that are=20 going to be looking at trade-offs."
PC makers generally reap thin profit margins, so don't expect prices = to drop=20 precipitously. In addition to whatever price cuts they do make, = companies also=20 are likely to offer more package deals that include free software or = hardware=20 add-ons to make more expensive machines look like a better deal. They = may also=20 rely on the age-old practice of luring shoppers with a low-end, cheaper=20 configuration, but try hard to up-sell pricier, more powerful = machines.
Four of the top PC makers, Dell Inc., Hewlett-Packard Co., Acer Inc. = and=20 Lenovo Group Ltd., wouldn't comment on prices or new products set to = launch in=20 coming months. HP's marketing efforts have focused recently on the = TouchSmart=20 line, touch-screen PCs that range from $1,300 to more than $2,000. The = No. 3=20 U.S. computer maker, Apple Inc., already unveiled its holiday season = lineup,=20 with only modest price cuts.
Complicating predictions about PC price cuts is the rise of = "netbooks" =E2=80=94=20 cheap, compact laptops meant for Web surfing, without the power and = features of=20 many full-priced notebooks. Many netbooks offer a choice between an = open-source=20 operating system and Windows XP =E2=80=94 another possible point in the = small devices'=20 favor now that XP has all but been replaced by the less popular Windows = Vista on=20 full-featured consumer PCs.
Major PC makers and smaller vendors have added at least one netbook = to their=20 current lines, at lower prices than even the most basic laptops. Most = cost less=20 than $500; Acer, which sells some Aspire models for well under $400, = said it=20 plans to be very aggressive in setting low prices for its netbooks.
Richard Klugman, a consumer electronics analyst for New York-based = Majestic=20 Research, said shoppers spent dramatically less on gadgets in September, = an=20 early predictor of grim holiday sales. Still, he predicted some items, = netbooks=20 included, will stay hot no matter how much the U.S. economy cools.
The netbooks trend could help PC makers keep unit volumes steady = during the=20 holiday shopping season, even if it means taking a hit on revenue and = profit=20 margins. It could also backfire by diminishing the appeal of regular = laptops and=20 desktops.
PC makers tend to see netbooks as a secondary computer for households = that=20 have at least one powerful, feature-rich PC. But that logic comes into = question=20 as the number of movies, music and applications that can be accessed = through a=20 Web browser grows.
Stephen Baker, an analyst for market researcher NPD Group, said = netbooks are=20 the "wild card" of the holiday season, but that ultimately, PC makers = won't push=20 them to the detriment of the more profitable computers they sell.
Baker said he thinks the problem for PC makers this year isn't how = much to=20 cut prices or push low-end netbooks to appeal to budget-conscious = shoppers =E2=80=94=20 it's whether such people will walk into the store in the first = place.
"We're all kind of sitting on pins and needles wondering," said Mark = Hill,=20 Acer's general manager for the U.S.
Even so, Hill said Acer isn't revising its strategy for prices or = marketing.=20 Acer isn't convinced that sales of PCs are as likely to be curtailed as=20 purchases of other consumer electronics during tough economic times.
"Is the PC space really discretionary spending, or are people buying = a=20 personal computer because they need one for managing finances (or) = continuing=20 their education?" Hill said. "I think we'll still continue to see people = invest=20 in themselves."
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