PC squeeze means DVDs for the masses

Recordable DVD drives earlier this year were sold as a high-end retail item found only in top-notch desktops. But by this holiday season, consumers will likely be able to find the same high-end technology in machines that sell for as low as $1,000. Weak PC sales and the ever-troubled economy may push companies to offer new PCs--even high-end models with DVD burners--at bargain prices.

Amid a dismal sales season, a $1,000 PC with a DVD+RW drive "might be a compelling-enough reason to get people out to buy," said Stephen Baker, an analyst at NPD Techworld.

Computing giant Hewlett-Packard, which zoomed to the top in retail sales a few years ago in part as a result of adopting CD-rewritable (CD-RW) drives early, will likely offer PCs with DVD-rewritable drives for about $1,000, Baker said. HP now sells desktops with such a configuration for about $1,350.

By comparison, Apple Computer earlier this year released its iMac with a DVD-recordable drive for $1,799.

How the holiday sales season will turn out is "anyone's guess right now," said Anne Wilcox, vice president of marketing at Emachines.

"We think the modest price points will do well, because they have always done well. People feel better about buying a more modestly priced PC...because they didn't just (buy) a $2,000 PC that will be priced at $1,499" soon.

Finding the right sales pitch
Emachines plans to refresh its desktop lineup in October but keep prices around the range of $399 after rebates. The company is also working on a flat-panel monitor that will be available in both 15-inch and 17-inch sizes later in the fourth quarter.

Sources familiar with Emachines' plans say its new top-of-the-line system will be based on Advanced Micro Devices' Athlon XP 2200+ processor and will sell for about $1,000.

For its holiday push, HP is expected to introduce several new PCs by mid-October. In the first major overhaul of its entire consumer line since the Compaq merger, the new models will reflect HP's strategy for diverging its two consumer PC brands, the HP Pavilion and the Compaq Presario.

It appears that HP may push the Pavilion line to feature new, high-end technology while the Presario line will target bargain hunters.

HP's new Media Center PC will become its flagship offering for the holiday season. The PC uses a special version of Windows XP that allows it to double as a TV tuner or digital video recorder. These types of systems are expected to sell for around or above $2,000, depending on the configuration.

Several new Compaq machines will challenge Emachines for the low end of the market, with prices starting under $500, sources said. HP's current low-price PC is the $529 Pavilion 502n.

HP also plans to release a tablet PC, a mobile computer that "reads" handwriting on a touch screen, similar to a pad of paper. The device will be sold under the Compaq Evo brand.

The back-to-school sales season was sluggish, despite a host of rebates and promotions geared for the educational market, analysts said.

"August didn't come through the way I think we thought it would," said Baker. "I think people were cutting back...trying to make ends meet."