April 20, 2006 12:33 PM PDT
Spring cleaning could mean great PC deals
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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