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Analysts see PC prices stabilizing

April retail PC sales show a startling change in buying habits as retail prices start to stabilize, a sign that falling PC and portable prices are a thing of the past.

    PC retail prices have started to stabilize, a sign that falling PC and portable prices are a thing of the past.

    But that doesn't mean there aren't any cheap PCs to be had. Just the opposite: Consumers are expected to benefit from a wider range of PC choices, both in configurations and price.

    "We're seeing a flattening of prices, and that trend is continuing in both desktops and notebooks," said PC Data analyst Stephen Baker. "Instead of shifting down--with the high end dropping and the low end dropping--now there is a stable string of prices between $500 or so on the desktop to the low-$2,000 range."

    April retail PC sales show a startling change in buying habits. Sub-$1,000 PCs fell to their lowest market share in nearly a year, 71 percent, while systems priced between $1,000 and $1,500 surged to 25 percent share from 13 percent a month earlier, according to PC Data.

    Baker warned not to expect an end to low-cost systems but rather an increased mix of systems with richer, more attractive configurations at good prices. The shift means PC makers are beefing up systems in the upper end of the sub-$1,000 range rather than cutting prices to compete below $600.

    For April, sub-$600 PCs held fairly steady at 35 percent share. PC makers continued to offer fairly basic systems in this price range while adding juicy extras--such as DVD and CD-RW drives--to systems $800 and above.

    "Given the configurations companies can create in those price ranges, they've managed to create what customers want and keep the price steady," Baker said.

    April unit sales increased a modest 8.7 percent year-over-year, while revenue increased 2.9 percent. The average selling price fell a modest 5 percent from a year earlier--the lowest decline in over three years--to $876.

    Hewlett-Packard beat Compaq for the third month straight, in another sign Houston-based Compaq has permanently ceded the retail sales crown to its Palo Alto, Calif.-based rival. HP had 37.4 percent retail market share versus Compaq's 32.4 percent. Emachines captured the third spot with 16.2 percent share.

    The Compaq Presario 7360, a 500-MHz AMD K6-2 based consumer system, captured the top spot in retail sales, with an average price of $586. The Presario 7470, with 533-MHz AMD K6-2 processor, followed at an average price of $780. The Emachines Etower 500, sporting a 500-MHz Celeron processor, took the third spot at $471.

    Two HP Pavilion systems, the 6630 and 6635 rounded out the top five, respectively, selling for $570 and $643 and packing 500-MHz and 533-MHz Celeron processors.

    Beyond the top five, higher-priced systems ruled. The $868 Presario 7478, with a 533-MHz AMD K6-2 processor plus CD-RW and DVD drives, took the sixth position. The Pavilion 8665c--with a 600-MHz Pentium III processor, CD-ROM drive and CD-RW drive--followed, selling for an average $1,241. The Pavilion 9680c took the eighth position, at $1,476, with a 650-MHz Pentium III processor, CD-RW and DVD drive.

    On the processor front, AMD continued to lose ground to Intel after a surge during the holidays. Intel processors appeared in about two-thirds of the retail systems sold in April versus just more than one-third for AMD.

    In some ways, the month belonged to the Pentium III, which surged 10 percent from March to 31 percent market share. The Celeron held its lead, at 34 percent share, but with signs of erosion to Pentium III. Baker attributed this shift to better high-end system sales. The success of higher clock-speed Pentium III processors also cleared the way for slower chips, such as the 600-MHz, to appear in lower-cost PCs.

    The AMD K6-2 had about 30 percent share and the AMD Athlon about 5 percent for April.

    Notebooks showed little price movement from a year earlier, selling for an average $1,702. Unit shipments increased 7 percent, while revenue did slightly better, gaining 7.5 percent year-over-year.

    Compaq continued to dominate the retail notebook market with 39.5 percent share, followed by Toshiba at 21.4 percent. Sony captured the third spot with 12.9 percent market share, just ahead of HP's 11.9 percent.

    The Compaq Presario 1200-XL 106 outsold other retail notebooks, at an average price of $1,184. The $1,003 Toshiba Satellite 1605 took the second spot, followed by the Sony PCG-F430 at $2,273. The two leaders packed AMD K6-2 processors and the Sony featured a 450-MHz Pentium III.

    Two Presario portables rounded out the top five, the 1200-XL 111 and 1200-XL 118, selling, respectively, for $1,869 and $1,388. Both systems have 500-MHz AMD processors but with different features; the XL 111, for example, packs a DVD drive.

    Processors proved the big change in portables, with Pentium III gaining at the expense of Celeron. About 32 percent of notebooks sold in April had Pentium III processors, up from 5 percent in December. By contrast, Celeron fell to 2.9 percent share, down from 25 percent in December.

    Overall, AMD dominated the retail notebook market with 51.4 percent share.