Dell comes near the magical "$999" mark with its new Inspiron 2500, which starts at $1,049. Meanwhile, Hewlett-Packard on Monday unveiled new Pavilion n5300 notebooks that offer better features than the Inspiron 2500, such as a slightly faster processor and a DVD drive. However, its price tag starts at $1,299.
In what might shape up to become the battle of the cheap notebooks--among Dell, Hewlett-Packard, IBM and Toshiba--Dell is using price to attract consumers who might not have purchased a notebook before.
Dell is "really going to hit a sweet spot in the consumer market," said Alan Promisel, an IDC analyst. With the current state of the PC market, he added, "consumers are kind of sitting on the sidelines, waiting for something to happen. It's a very impressive consumer configuration at that price."
At $1,049, Dell's Inspiron 2500 offers a 700MHz Intel mobile Celeron chip, a 12.1-inch active-matrix display, 64MB RAM memory, a 5GB hard drive and a CD-ROM drive. The notebook, in addition, includes six free months of America Online or one free year of MSN Internet access, ostensibly saving the consumer another $130 to $260.
Average selling prices for notebooks "are slowly going down," Promisel said. "We're seeing richly configured corporate systems at $2,000 and more budget-minded consumer models going down towards the $1,000 market. That's a trend I think is going to continue."
Despite its smaller screen size, the Dell notebook offers a number of features that have not typically been available on rock-bottom priced notebooks. The screen, for example, is active matrix as opposed to many previous $1,000 notebooks, which shipped only with dual-scan displays. An active-matrix display is considered better than a dual-scan one because it is brighter, is easier to view at side angles and minimizes the so-called ghosting effect when the cursor moves across the screen.
Similarly, the Inspiron 2500 includes 64MB of RAM and a lithium-ion battery, whereas low-cost models in the past provided only 32MB and nickel metal hydride batteries. Lithium-ion batteries can store more energy than their nickel metal hydride counterparts and thus last longer.
A lower-priced notebook is "something (customers) had asked us for some time," said Pat Cooper, group manager for Inspiron product marketing. "This is really touching a new market that we felt we wanted to pay more attention to, to put more focus on."
However, Dell wished to avoid putting together a system that was sub par, technologically. So the company set out to lower component prices.
"In some cases, we actually drove the cost down to below what some of our competitors might be paying for the component," Cooper said.
The Inspiron 2500 can be fitted with larger screens and other more high-end features, such as CD-rewritable or DVD drives. A configuration with a 15-inch display starts at $1,449.
The notebook represents a new entry-level price for the company and a new standard for the notebook market, but Dell still asserts that notebook buyers will continue to buy high-priced notebooks.
The 2500 will "be a sizeable part of the mix, but it won't be the lion's share," Cooper said.
Meanwhile, HP announced on Monday a pair of new lower priced Pavilion notebooks.
The new Pavilion n5300-series notebooks will range in price from $1,299 to $1,599. The $1,299 n5310, for example, offers a 750MHz mobile Celeron chip, 13.3-inch active-matrix display, 128MB of RAM, a 10GB hard drive and 8x DVD drive.
HP already offers a $999 Pavilion, the n5210. The machine packs a 650MHz mobile Celeron chip, but offers a 13-inch dual-scan display.
In the higher end of the notebook range, Dell began shipping on Monday a new Inspiron 8000 notebook for $2,118 with a 900MHz mobile Pentium III chip and 15-inch high-resolution display.
NEC on Monday also announced a pair of new Versa models. Although the new notebooks do not offer the low price of the Inspiron 2500, they do offer another novelties. They represent the first corporate-oriented notebooks to ship with Transmeta's Crusoe processor in North America. Packing a TM 5600 chip running at 600MHz, the new notebooks start at $2,299.
In related news, consumers can expect more price cuts and processor upgrades in notebooks over the summer. Intel will offer new mobile Pentium III chips and an 800MHz mobile Celeron.
Meanwhile, Advanced Micro Devices is expected to come out with the first mobile version of its Athlon chip in June. AMD has not actively participated in the notebook market since late last year when it released the last K6-2.