Comments on: Why PCs aren't pricey anymore

CNET News.com's Charles Cooper remembers the mail-order makers who shook the mainstream computer makers out of their lethargy.

[jafinlay]

Great!, but give us details

This is a great article about how PCs got cheaper by mail order companies being better than retailers at delivering what customers want. Now that the retailers have taken that over customers benefit. I get the big picture. How to apply it now to get the best deal. Say I want a laptop, do I surf the net, with froogle? Do I go to IBM, Dells and HPs sites and check features and prices? Do I look in the news paper? Do I take my companies special deal with Dell? It still isn't easy. I'll probably do all these, put it into excel and run the final numbers myself but it isn't easy. Thanks for any simplification that you can think of folks!

Sincerely, Judith

[camp88]

How's your Latin?

anno horribilis?

I tink it's "annus," der bub.

anno: "in the year," as in anno domini (in the year of our lord)

And "horribilis" actually means "terrifying" in Latin. The Queen
used it to make a pun, but she's probably taken a few more Latin
lessons than the rest of us.

I think what you actually want is "annus terribilis": dreadful year.
Alternatively, you could simply write in English and we'd
probably understand what you're trying to say.

[rloerzel]

It might not be perfect Latin

. . . but the expression is 'annus horribilis' not 'annus terribilis.' Since it's slang, I don't really think complete knowledge of Latin is required for its use.

http://www.phrases.org.uk/meanings/annus-horribilis.html

[charlie cooper]

Cogito ergo dumkopfff

tx for the catch

[GrandpaN1947]

So what's different?

Are you saying we bought computers online because they were too expensive? Excuse me but, computers are still too expensive and cost thousands of dollars. Only now they are all made overseas and we all can't find decent paying jobs to buy them. The big computer thing happened because, for a short period of time, the FED didn't raise interest rates when "wages were too high". This allowed jobs to be created and dollars to be spent on things like computers. Excuse me while I go fill up my car with $3 gas at lower wages than 10 years ago.

[Dr. Josh]

Thousands of dollars?

Thousands of dollars? What exotic piece of technology are you using? The story centers around typical desktop systems, not laptops. And if you are paying "thousands of dollars" for a computer, I hope you're a gamer, scientist or a professional graphics artist - if not, it's your own fault, just like the story says.

[cyberspittle]

Should be title "The death of Computer shopper"

funny how times have changed. I blame it on the speed of the internet. I used to spend hours and hours going through Computer Shopper magazine. It used to be real thick, like a Sears catalog. Sure there there were some articles to read, but mostly it was better to read the ads in it. Funny, I still have my 1st 486 that I put together with the computer shopper. It was a real speed demon on it's day with 16MBs RAM (4 pieces of 4MB SIMMs), 486DX266Mhz processor (replaced with a 133Mhz Powerstacker), a 2MB ATI Mach32 video card, and also a 240MB Western Digital hard drive. Funny how times have changed.

[charlie cooper]

Speaking of Computer Shopper

Dude, I have a story to tell. Yours truly cut his teeth learning the tech biz by covering the computer retail business in the mid to late 1980s. but my publication, Computer & Software News, went bust in the spring of 1989. At that point, I found a job working for Computer Shopper, which Ziff Davis had just purchased from Patch Communications and was moving the magazine to New York. Within a very short time, the number of ad pages exploded (and no, that had little to do with me.) But the growth in the direct PC busines was extraordinary. At its high point, Shopper published one issue that was close to 1000 pages. By law, the book needed to maintain at least a 20% ratio of edit. Even though it may have been hard to find, we were talking about a lot of reviews each month.

I doubt we'll see something like that again for a very long time - if ever. The shift to the Internet was the game changer.

[bbbl67]

Computer Shopper was great

Before ZD had bought them, they were always known for not only their ads, but also their high-quality articles. It was one of the few places where you could read about Linux, Unix, non-Intel processors, etc. It was a real geek-athon back then.

[markforstneger]

Blast from the past

Wow! Zeos! Haven't heard that company's name in years. I remember back in 1994 when I got my first PC in college and they were one of the big players. Gateway "2000" always had the cutesie insert ads in PC Magazine. I ended up going with a Micron, which served me well. Later I bought a Gateway from a Gateway store, which closed several months later. About a year ago, my father bought a Dell from a Dell kiosk in a mall. How times change. How old I'm getting!

[charlie cooper]

Those adverts!

And speaking of "Gateway 2000," do you recall the ads? Nearly each one featured Ted Waitt in some goofy cameo. They were really very clever and, truth be told, probably had more than a little something to do with their early success.

[jscott418]

PC are cheap because of competition

The simple supply and demand 101 has brought the cost of PC's
down. Just like laptops are now doing. Used to be a few thousands
would by you a laptop. Now you can get one for under $500.
Truth is parts from China have brought prices down for he stuff
computers are made of. Bear in mind too how much America has
lost in US owned computer companies. With IBM out of it and Acer
buying Gateway, this leaves HP and Dell with ties to US.Of course
Apple too.

[jacquesmueller]

But at what cost?

Ah, yes, those days of just holding out your hand to accept a credit card to ring up a $6,000 system consisting of an IBM XT, Monochrome screen, AST 6-Pak Plus (with I/O and clock, please), and an Epson LQ-1500 printer! Thank you, indeed, to the entrepreneurs that forced the hardware price down. But at what cost?

Yes, the margins had to be there for the retail channel to actual support both introducing this new world to the public AND to actually support it! Again, yes, their were support groups, bulletin boards, etc., but the main avenue for the non-computer enthusiast that was trying to delve into this new world was the retailer. These retailers had a local presence with more locally tuned knowledge for both marketing and support which is devoid from the larger chains of today. Heck, most of the folks in the "computer departments" today shouldn't be selling water! Someone has to pay for this, but who opens their wallet for support once it is removed from being "built-in" to the sauce? And I'm referring to INTEGRATED support when an issue arises with your setup. Some try and do a commendable job with the components that they manufacture, but attempts usually devolve into finger-pointing and general disgust on the part of the home user. This, in fact, is arguably the largest contributor to the downslide of Dell over the past 2 years.

Corporate America has done a fairly good job of understanding the concept of Total Cost of Ownership (TCO), but it seems the Consumer PC market deems itself immune from the "softer" components of true support cost, brand damage, etc. Unfortunately, many of those entrepreneurs were ready to "split the margin" with the consumer without really properly taking on the rest of the equation. There are exceptions.

Apple, with its higher than normal ratings on support, benefits from both its directly controlled retail presence (ever really watch how busy those Genius Bars are?) and their more closed ecosystem. How do they pay for this? Both through better margins and ADDED price; such as Applecare. They execute well and they have the products that people want accessible in locations with capable (and in person) sales and support. As for the Windows space with HP, Dell, Acer, Lenovo, it's not as pretty.

Buy, hey, things are so cheap today you can just yank the device that's not behaving and get a new one! Besides the growing mountain range of dumped plastic, I'm just not sure that the full experience that PC visionaries had in mind can be realized without addressing this cost as well.

[komindo]

PC is made from components

The PC price drop because the PC component price drops. HP and Dell still keep some kind of profit (HP and Dell keep margin by downsizing as well.) while manufacturers is suffering the price drop and increasing labor cost in China. Remember PC is made from RAM, Hard Drive, Power Supply, LCD, Keyboard, CPU, CD-ROM with all the price drop by manufacturer. The efficiency effort is pushed by HP/Dell and executed very hard by supplier.

[komindo]

ODM

The biggest PC ODM company Foxconn (Revenue: 30 billion USD in 2007) is doing a fine job streamline the supply chain and distribution. This is a FxxKing labor/process efficient company who is very good at cost down.

[bbbl67]

Mail-order had little to do with it

The prices came down as a result of the acceptance of lesser brands, and even no brands. Local white box makers had at least as much to do with price reductions as the mail-order places. Contrary to popular myth, Dell's tremendous success up until a couple of years ago, was not as a result of any cost efficiencies inherent in the mail-order model, it was mainly due to Intel subsidies and some small amount of accounting fraud.

[charlie cooper]

It wasn't Dell

Dell had little to do with it. We did several market price comparisons in the early & mid-1990s and Dell often was at the higher end of the price spectrum.

[Libboh1]

Freedom

Dell, they gave us choice... They gave us the high end at a lower price.. Because of them you had others that tried to keep up.. Now they may be gone or have been bought out but if you can remember there was more to pick from..

[Andy kaufman]

Go back further in time

to 1986 when Dell was called PC Limited. Michael Dell sold PC Clones in his dorm room cheaper than IBM and Compaq. Dell started the PC Price Wars which led to lower prices in the 1980's.

[ggrs34]

Always Cheap in Australia

Australian PC's are about 30% the price of an equivilant Mac, they haven't been 'expensive' for a decade or more. WHY? because we get all components direct from China/Korea etc and assemble them to order in Australia, without paying all your USA taxes, tarrifs, corporate profits, bonuses etc.

Even though Mac's are made in the same countries as the PC's, we can only get Mac's direct from the USA and pay all 70% of the mark-up extra's to put a smile on Steve Jobs face - while adding nothing of value to the product. So like 90% of the world, we don't buy Macs.

You American's, I'm sad to say, have been screwed for far too long. Cry Freedom !!

[Ian Joyner]

Wrong

>Australian PC's are about 30% the price of an equivilant Mac,
they haven't been 'expensive' for a decade or more.<

That's wrong.

>WHY? because we get all components direct from China/Korea
etc and assemble them to order in Australia, without paying all
your USA taxes, tarrifs, corporate profits, bonuses etc.<

If we made them so cheap here, we'd be exporting them to the
rest of the world.

>So like 90% of the world, we don't buy Macs.<

Wrong again.

[BPMac]

Not cheaper

I have lived in Australia and the US. I can tell you that computers are no cheaper in Australia, in fact, I found them generally a bit more expensive.

Besides, the US and Australia have a free trade agreement, so if they were being assembled more cheaply in Australia someone would have taken advantage of that discrepency.

[blangton]

Ah...the good ol' days...

Yes - your article and especially, the comments brought back some good memories. Computer Shopper - had forgot all about it. Yes - great memories thumbing through and looking for the best deals on components. I built my own PC's back in those days and had a great, local supplier who could get me the parts cheap. I had some screaming home-brew machines along the way - NEC 8088, 286, 386, 486, AMD, my first 3 digit HD - 100mb - WOW!

Now to think that I have a 4GB thumb drive in one pocket and a WiFi iPod with a touch screen in the other for about the same money as a couple of tanks of gas in the SUV...my how times change!

Keep up the good work...

Bill

[Maclover1]

Way off base

Online only...gone forever. Online sales will grow more each year.

Honstly I would not shop at a store for much if I could get A. What I want online and B. At the lowest price.

I used to read lots of computer mags to include Compter shopper. Now I get one or two through work and none of them are for reviews of PC hardware. I get all of that information online now. I spec out online and if I can get the best price online (my macbook is from Mac Mall) then I buy online.

Only would I buy a "cheap" notebook at BB or CC during August (back to school) or during Christmas seasons where you will see some pretty good deals on low end stuff. That said most of those deals are online as well and you dont have to fight the crowds.

While you see article after article each year about how more people are turning to the internet you see this one??? Sure Dell has moved into stores..but the vast majority of sales will still be online.

[Fake Donald Trump]

Microsoft helped lower the price of the PC

by making the cost of developing an operating system lower for OEMs.

First it was MS-DOS and then later Windows. Microsoft set the standards for operating systems on PCs, and it cut the costs of PC Makers so they didn't have to pay the high R&D costs of developing a new operating system.

Before Microsoft set the standard with MS-DOS, PC Makers had to make their own operating system. Tandy had TRS-DOS, Commodore had Commodore BASIC, Atari had Atari BASIC, Osborne had Osborne DOS, Apple had AppleDOS, etc. Each different operating system could not run programs from other operating systems until MS-DOS and Windows became the standard.

Microsoft set the operating system standards that we use today, as well as application standards and most file formats.

Also most web pages are designed for Internet Explorer 6.0 or above, and most media formats are designed for Microsoft Media Player as well.

All of this cuts down the R&D costs of developing your own operating system and application software, which leads to lower prices for PCs that have it bundled on them.

The more software that gets sold, the lower the price of that software. Sell in bulk and it lowers the price. The more PCs that get sold the lower the price as well, sell them in bulk and it lowers the price.

The same is true of Wal-Mart they sell more items in bulk, at lower prices than anyone else. They have a good inventory system software database that helps them keep costs low, they use Windows as a standard for that database.