Notebooks dropping to $99

The discount-notebook madness continues.

Circuit City will try to best Wal-Mart Stores and Staples in notebook pricing this holiday season with a Compaq notebook for $299 after rebates, or $99 with rebates and a 12-month subscription to Vonage, according to bargain-hunting Web site Black Friday Ads.

The site posts scans of Sunday newspaper inserts before they get delivered in papers. The deals can change, but history shows that the prices reflected in the ads become a reality. Steve Baker at NPD Techworld earlier this month predicted that $99 laptops, after all rebates and specials, would appear this holiday season.

Wal-Mart and Staples have come out with $398 and $399 Compaq notebooks.

The Circuit City notebook is similar, with a few exceptions. It comes with a Celeron processor from Intel rather than processors from Advanced Micro Devices. The Circuit City laptop, however, contains a drive that burns both DVDs and CDs, not just CDs like the Wal-Mart laptop. Wal-Mart's site is no longer advertising the cheap Compaq laptop, an indication that it may already be sold out.

All three come with 512MB of memory, a 15.4-inch screen and a 60GB hard drive.

Circuit City currently sells the Compaq notebook for $499--it says the computer ordinarily lists for $680. To get to $299, Circuit City gives consumers a $280 instant rebate at the store and a coupon for a $100 mail-in rebate ($680 minus $380 comes to $299).

The Vonage subscription is a novel twist. Often, retailers will offer $99 PCs but require that consumers subscribe to 12 months of Internet service, usually from AOL. In this case, the price of the PC is partly subsidized through phone service.

While analysts expect consumer electronics sales to grow this holiday season, they also expect significant price cuts on items such as PCs and TVs. Amazon.com and Wal-Mart currently offer a discount Panasonic plasma TV.

Hewlett-Packard, which makes Compaq brand PCs, has been one of the more aggressive companies when it comes to pricing. HP passed Dell last quarter to be the largest PC maker in the world.

Dell, however, is no stranger to discounting and will likely try to regain ground lost to HP. Similarly, Acer, which has been the fastest-growing PC maker in the world for the past two years, and Gateway, which is trying to cling to its market share, have strong motivations to cut prices.