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Michelle Kessler Gannett News Service

December 23, 2003

Laptop bargains abound, partly because of stiff competition between tech heavyweights Dell and Hewlett-Packard.

Laptops will probably sell for an average $1,300 this month -- a new low, says researcher NPD Group. In 2003's first 10 months, 15 percent of laptops sold for less than $1,000 compared with 6 percent last year.

Entry-level laptops have seen the steepest drops. This is the first year it's easy to find quality ones for less than $1,000, says NPD computer analyst Stephen Baker.

Savvy shoppers find even better deals. Best Buy recently sold an entry-level Toshiba laptop with Windows XP and a DVD player for $499, after rebates.

Makers and retailers are dropping prices to compete in the fast- growing laptop market -- a bright spot in a sluggish economy. In the third quarter, worldwide sales jumped 40 percent from a year ago, says researcher IDC. Desktop sales rose just 11 percent.

Dell and HP, fighting for the No. 1 PC-maker spot, say laptops are big revenue drivers. But Dell hinted that price wars are crimping profits. The two recently sold entry-level laptops, also with XP and a DVD player, for about $700, after rebates.

Laptops sizzle because:

*Wi-Fi is hot. Wireless technology lets laptop users surf the Web without plugging in. That makes laptops more useful, because users stay connected while away from their desks, says IDC computer analyst Roger Kay.

*They're more powerful. Desktop PCs traditionally had more muscle because it was tough to pack powerful components into a tiny laptop. Now, technology improvements narrow that gap, Kay says.

*Price gaps with desktops narrow. Laptops often are 25 percent more costly than a desktop and monitor combination. But many desktop buyers are choosing flat-panel monitors, which cost twice as much as conventional CRT monitors. That narrows the gap that once drove many consumers to desktops, Kay says.

What's more, desktop profit margins are so thin that it's hard for manufacturers and retailers to trim prices. Such prices have steadied around $750, without a monitor, NPD says. To woo customers, desktop makers are packing in extra features such as DVD burners, says ARS analyst Toni Duboise.

But the deals may not last. Long-depressed computer component prices are rising as demand increases. One kind of computer memory, for example, jumped to $4.26 in October from $3.99 in January, says Semico Research. Because each PC needs dozens of components, small price increases add up -- possibly raising consumer prices.

Gannett News Service

(C) 2003 Chicago Sun-Times. via ProQuest Information and Learning Company; All Rights Reserved

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