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Low-income folks buying PCs

Poorer households, enticed by cheaper computers and the Net, will lead first-time PC purchases in 1999, a new report says.

Low-income households, enticed by the lure of low-cost PCs and the Internet, will be the leading source of first-time PC buyers in 1999, according to a report from a marketing research firm.

These households, defined as those earning less than $35,000 annually, had long been thought to be largely missing out on the Internet revolution and the latest computer technology. A recent study, one of many, suggested a widening gap in online access according to income--a separation of technology haves and have-nots.

But a new survey, "The PC Market In 1999" from Forrester Research, suggests the "digital divide" will narrow in 1999 and reveals some interesting changes in the profile of the first-time buyer.

"First-time buyers with a median household income of less than $26,000 will be drawn by sub-$1,000 PCs that are easy to set up and use," Shelley Morrisette, director of quantitative research at Forrester, said in a statement.

Marking an important shift away from previous profiles, an overwhelming majority, 72 percent, of first-time buyers don't use a PC at work, the report found.

"That's just a huge number. That's the big story here," Morrisette added in an interview.

Until recently, more than 70 percent of PC owners had computer experience before buying a home PC. Now, the primary objective for many first-time buyers is to learn the technology.

"[Many first-time buyers] feel like they've been left out," Morrisette noted. "But I think it does show that they at least want to keep up."

Forrester warned that the industry should not neglect this growing segment of the market.

Because many first-time buyers will be PC neophytes, computer makers, software vendors, and Internet service providers should be prepared to assist these new users by deploying full-service call centers and help lines, Forrester said.

"The profile of first-time purchasers also includes more women (59 percent) and less education--only 37 percent have attended college--than in the past," the report stated. "In contrast, the majority of repeat buyers are male and 65 percent have some college education."

Compared to repeat buyers, first-time buyers also are less likely to be married and have children, according to the report. The additional-buyer household consists of 3.3 members, while the first-time household has only 2.4 people.

Data for "The PC Market In 1999" was drawn from a survey of 120,000 North American consumers and was conducted with the NPD Group in the fall of 1997.

Next year, PC buyers will fall into three broad categories, according to the report: first-time buyers, replacement buyers, and additional buyers. First-time buyers will account for 40 percent of the home PC market, followed by replacement buyers (36 percent), and additional buyers (24 percent).

In contrast to first timers, replacement buyers want a more complete PC experience than new users. They are not as sensitive to prices and more aware of PC technologies such as processing power, modem speeds, and multimedia capabilities. Because the No. 1 purchase motivation for these buyers is to go online, PC makers should bundle Internet access with their PC packages, Forrester recommends.

"Replacement buyers are looking for faster machines to replace their older PCs; while consumers in the additional-buyers group are purchasing an extra computer to help educate their children. And, of course, all three groups are buying their new computer to log on to the Internet," the report said.

Similarly, replacement buyers should be a prime target for broadband services from access providers.

Nearly half of the additional buyers indicated that they want to use their new computers to help educate their children.