November 28, 2004

New Computer Updates Arriving Just in Time for Holiday Shopping

Nov. 28--So how many home computers have you bought? One every two years? Every four?

With computers in two-thirds of all households and more than one computer in half of them, according to experts, the vast majority of home-computer buyers have plenty of purchasing experience with the basics like RAM and hard-disk size.

What computer shoppers need at this stage of their technology cycle is a strategy -- for both features and price.

Go cheap?

Go expensive?

Go different?

There are four basic kinds of personal computers for the home today: Low- and mid-priced desktops, entertainment center computers, high-performance gaming systems, and more-or-less portable "desktop replacements" with oversized screens and conventional microprocessors.

"Today's laptops can do everything that their powerful desktop counterparts can do," says Neal O'Connor, a home-computer user who opted for a Dell Inspiron.

Experts say that the home and consumer categories have been evolving much more rapidly than their counterparts in the business arena, which tend to lag in speed, features and price.

According to Dell spokesman Liem Nguyen, the key concern for business buyers is stability and continuity: A major corporate account might order 1500 computers today, and 500 identical models in six months, and wants them configured exactly the same for ease of administration.

Home models, on the other hand, are typically "refreshed" much more frequently. "If a new processor is introduced, it'll be available on a home PC first before a business PC," Nguyen said.

While categories have proliferated, according to research firm IDC, there are fewer choices among brands. More than half of home computers are built by just two companies: Mail-order master Dell (28 percent of computer sales in the second quarter of 2004), and merged behemoth Hewlett Packard/Compaq, at a little less than 26 percent. Throw in Gateway and eMachines, which merged in the past year, and these four companies account for well over 60 percent of the home computers sold in the United States.

Despite lavish press coverage of its stylish iPods and iBooks, Apple, with its own unique operating system, has just 3 percent of sales, and IBM, once a force to be reckoned with, has less than 1percent.

In good news for consumers but not the industry, prices have shifted southward as well. More than a third of all computers sold now cost less than $800, a price category that was practically nonexistent five years ago. Back then, almost 50 percent of the computers sold to home users cost more than $2,000 versus less than 2 percent today.

"Manufacturers" don't actually build PCs from scratch; rather, they assemble them in the United States from standardized components including graphics cards and hard drives from Asia, then add a standardized software package generally running under Windows XP.

In theory, the biggest builder can cut the best deals with suppliers, and pass the savings to you.

Editor's note: In today's Business section, you will find a guide about what to look for in each category.


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