April 20, 2006 12:33 PM PDT

Spring cleaning could mean great PC deals

This spring looks like a good time to get a deal on a PC--if you're willing to invest in technology that will look pedestrian in eight months.

It's the perennial problem in the PC market. At any given point in time, some technology that looks pretty cool is right around the corner. Do you buy now and get a good deal, or do you wait for an expensive new operating system or chip that will keep you going for years?

This year, there are some particularly interesting carrots dangling off in the future. New products from both Microsoft and Intel are within sight, with the Vista operating system scheduled--as of now--for early 2007, and chips based on Intel's new Core architecture expected to arrive soon. Apple Computer is also in the midst of a transition, with plans to shift its iBook and Power Mac products to new Intel chips before the end of the year, following the MacBook Pro, iMac and Mac mini.

But in the months before these products are ready, loads of PCs with Windows XP and Pentium D processors as well as some PowerPC-based Macs have to go to make room for the new stuff. A surplus of inventory at Intel and other component manufacturers should lead to great deals on PCs in the coming weeks and months, according to PC analysts.

A little more than half the desktop PCs sold at retail in the first quarter sold for less than $600, according to data from NPD Techworld. The average selling price was $662, said Stephen Baker, an analyst with NPD. On the notebook side, around half of the units were priced less than $1,000, while $1,022 was the average selling price. The average price for both types of PCs should decline as the current mid-level configurations slide down into the lower price bands, he said.

"The faster the obsolescence, the better the deals on existing stuff," said Roger Kay, an analyst with Endpoint Technologies Associates.

Corporate buyers might also find the time is right for adding PCs, said Sam Bhavnani, an analyst with Current Analysis. Most corporations are expected to take their time with Vista, carefully evaluating and planning for the new operating system well past its early 2007 introduction. A lot of these companies have steadily upgraded their systems over the past few years, but the deals in the second and third quarters might be too good to pass up, he said. Many of the systems available around then will be able to run Vista once IT departments are ready.

PC sales were actually fairly strong among consumers in the first quarter, but Intel's profits fell 38 percent compared with the previous year. The chipmaker suggested that PC growth won't be as strong as it had hoped during the rest of the year, since its customers still have a backlog of inventory to work through.

Other component makers, such as flat-panel display and hard drive manufacturers, are pointing to a similar softness, said Richard Shim, an analyst with IDC. With inventory building at both Intel and its PC partners, price cuts are almost inevitable, he said. And Advanced Micro Devices might have to follow suit to keep its recent market share gains going, Kay said.

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NPD Group Inc., inventory, Intel, Microsoft Windows Vista, PC

7 comments

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Might be just like the CB fiasco.....
The assemblers are so anxious to sell their pre-vista models at a
discount that they just might swamp the market to a degree that
the post-vista models aren't desired anymore. Greed killed the 40
channel CB market - will greed kill the post-vista market too?
Posted by Earl Benser (4310 comments )
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You may be right but
there's an expectation in the pc market for units to become obsolete. I, for instance, resisted going to XP though I knew it would be an improvement over '98 because the older software was cheaper, I was already accustomed to it, the software developers took quite some time to build a catalog of compatable applications and I wanted to wait until it was around long enough for the worst of the glitches to be worked out.

I'm excited about the new chips and Vista and know I'll upgrade at some point but I'll be in no great hurry for exactly the same reasons. I plan to buy a new pc and probably a new laptop in the next year or two and I'm sure they'll have pentium chips and XP. I probably won't upgrade to Vista until the product support for XP is about ready to expire. By then, the versions of the applications I use - and Vista itself - will be thoroughly tested and the major bugs fixed and the prices will have come down.

While many users will do the same thing, there's a large segment of users, (super geeks lol), that have to have the newest and best.

The PC market also differs from the CB market did in that PC's are indispensible parts of modern life while CB's were for most users during the "craze" more of a fun toy. Sure, they saved me a lot of traffic fines but I know very few people that have them in their cars now. I don't think I know anyone that has ever owned a PC in the past that doesn't have one now.
Posted by mrketchfish (26 comments )
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Great Deal already
I have been buying computers for my job for the past year or so from Network Data Systems and so far they have been a great deal for us. And they are Microsoft Vista ready unlike the dell's we have...
Posted by Pushrod (6 comments )
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Great Deal already
I have been buying computers for my job for the past year or so from Network Data Systems and so far they have been a great deal for us. And they are Microsoft Vista ready unlike the dell's we have...
Posted by Pushrod (6 comments )
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Sounds Great
I have no problem with not using Vista for a while.. even XP is optional.

I have linux running on a P3 1GHz system right now so if I up it to a good bargain machine it will be a move up and I'll still be able to use the latest-and-greatest version of software running Linux for the next 5 years!
Posted by dragonbite (452 comments )
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