Wal-Mart offers sub-$600 notebook

The retailer trots out a bargain portable PC that packs Wi-Fi. Is it getting ready for a laptop push for the holidays?

Wal-Mart Stores has begun selling a Wi-Fi notebook PC for less than $600, which analysts say could herald a laptop push by the retailer for the holiday season.

The retail giant began offering the wireless notebook, manufactured by Taiwan's Elitegroup Computer Systems, in late July for online sales only. It's listed at $598, without discounts or mail-in rebates.

Wal-Mart has traditionally sold only a limited number of notebook models, including laptops from Hewlett-Packard and Toshiba. Instead, it has concentrated its marketing efforts on desktop PCs, but it also sells lower-priced machines based on the Linux operating system.

The move suggests that Wal-Mart is evaluating new strategies to pump up notebook sales during the 2004 holiday season and possibly beyond, said Sam Bhavnani, an analyst with Current Analysis, a San Diego firm that tracks retail sales.

"It's a very entry-level configuration," Bhavnani said. "But it does have wireless, which makes it a very compelling offer. That's where this system will pose a threat (to brand-name PC makers) once it hits the shelf. The Wal-Mart customer is going to see it there, see the price and just buy it."

In addition to wireless, the ECS notebook comes loaded with a 14.1-inch display, an AMD Athlon XP 1600+ processor, 128MB of RAM, a 40GB hard drive, a DVD-drive, Wi-Fi 802.11b and Microsoft's Windows XP Home Edition operating system. It also carries a one-year warranty, according to Wal-Mart's Web site.

Although it's fairly common for stores to sell notebooks for as low as $500, the Wal-Mart offer stands out because it does not require customers to use discounts and mail-in rebates to get the PC for the $598 price.

Moreover, the ECS machine offered by Wal-Mart includes Wi-Fi, a feature that's become very popular on notebooks in general, but which many rock-bottom-priced systems still lack, Bhavnani said.

One potential shortcoming is that the Wal-Mart/ECS model has only 128MB of RAM, as opposed to the 256MB more common in competing systems. But first-time or budget buyers might be willing to overlook that, given the machine's price.

But in general, technology progression has lowered prices on PC components, which means that today's cheap notebook is much more capable and less costly than yesterday's budget machine. Most low-price notebooks can now burn CDs and can usually connect to wireless networks--features that were once reserved for high-end models that cost thousands of dollars.

Just two years ago, it took almost $1,000 to buy a machine such as Gateway's Solo 1450SE, which in June 2002 offered a 1.3GHz Intel Celeron chip, a 14.1-inch screen, 128MB of RAM, a 20GB hard drive and a DVD drive for $999 after a $100 mail-in rebate.

Lower prices have helped notebooks see a recent rise in popularity, and their sales are expected to grow faster than the overall PC market. Research firm IDC forecast that laptop computers will make up nearly half of all PC shipments in the United States and almost 40 percent of such shipments worldwide by 2007.

So it's no surprise that Wal-Mart, which sells sub-$300 desktops loaded with Linux, might want to explore the lower reaches of the notebook market, Bhavnani said. "At $600?you can basically guarantee they're going to sell all of those (ECS machines)," he said.

Although it's early to say whether laptop sellers should be worried--Wal-Mart carries a lot of weight with its nearly 2,900 stores and so-called supercenters--competition at the lower reaches of the notebook market is already quite stiff.

Retailer CompUSA, for one, is advertising a nicely loaded Hewlett-Packard Pavilion ze4805us notebook for $849, after $250 in instant and mail-in rebates. It comes with a 15-inch screen, Athlon XP 2800+ chip, 256MB of RAM, 60GB hard drive, Wi-Fi 802.11g and combination CD-burner/DVD drive. The offer is good through Aug. 21, according to the store's Web site.

Wal-Mart's retail site lists a nearly identical Pavilion ze4805WM-B model, which appears to lack Wi-Fi, for $928.

Even Dell has gotten into the low-price game. Its Inspiron 1000 notebook, introduced earlier this summer, starts at $899 before rebates. The most basic Inspiron 1000 configuration includes a 2.2GHz Intel Celeron processor, a 14.1-inch display, 256MB of RAM, a 30GB hard drive and a combination CD-burner/DVD-ROM. It does not include wireless (a $39 upgrade) and it offers a standard 90-day warranty (a one-year warranty is a $29 upgrade). However, Dell offered the machine with a $100 mail-in rebate and a free printer through Wednesday.

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