December 21, 1998 5:55 PM PST

Report: Low-cost PCs surging

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The average price of a consumer PC dropped below $1,000 for the first time in November, a trend driven by increasing demand for low-cost PCs and acceptance of non-Intel processors.

Prices fell on both high and low-end systems in November, according to the report from PC Data, with 58.5 percent of the market comprised of sub-$1,000 systems. PCs priced over $1,500 made up only 10 percent of the retail market, according to the survey, which focused on that market.

At the same time, the configurations for sub-$1,000 and sub-$800 systems are becoming more robust, according to Stephen Baker, PC Data analyst. "They do have to skimp on some things to make those price points," he said. "But the fact is, the performance delta between a $499 system and $1,499 system isn't what it was a year and a half ago."

Retail sales rose significantly, up over 31 percent from the same period last year, with Apple's iMac taking approximately 7.1 percent of all consumer PCs sold. PC Data examined sales through retail and mail order outlets.

One factor in the iMac's success has been its stability in the market. While other vendors have rotated in different systems and configurations, the same iMac has remained on store shelves, Baker said.

"One of the reasons it's doing so well is it's the only [configuration] that's been in the top five for the last five months," he noted. "Other vendors tend to rotate, but Apple has had the same model in there month after month."

On the strength of iMac sales, Apple's retail market share doubled from 5 percent to 10 percent, according to PC Data, but it still trails Compaq, Packard-Bell NEC, HP, and IBM, in that order.

Ironically, despite the surge in popularity of cheap computers, the best sellers are on average above the $1,000 dividing line. "The interesting thing, is if you look at the top five sellers, four of the five sold for $1,100 or more," said Baker, referring to the $1,299 iMac, the Compaq Presarios 5150 and 5170, and the Hewlett-Packard Pavilions 6355 and 6370z. Only the HP Pavilion 6355 is priced below $1,000.

Apple isn't the only vendor benefiting from the surge in non-Intel based PC sales. Sub-$1,000 AMD-based PCs accounted for 37 percent of retail sales last month, and National Semiconductor took about 30 percent of these sales.

"Overall, Intel has about 46 percent of the retail market, and Intel has the franchise on anything about $1,500," Baker said. "Basically, Intel has a lot of competition."

Baker said he expects PC prices to continue to decline over the next few months. "There are the twin problems of the high-end continuing to shrink, and the lowest end of the market growing rapidly," he said.

Intel is an investor in CNET: The Computer Network, publisher of News.com.

 

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