Just as last year saw the rise of the sub-$1,000 PC in the desktop market, this year is witnessing a similar phenomenon in notebooks: A spate of sub-$2,000 notebooks with the newest mobile Pentium II processors.
The upshot for buyers: New notebooks with Pentium II chips are, in some cases, falling below prices for models with the older, less-powerful Pentium MMX processors.
|Sub-$2,000 Pentium II notebooks|
|12.1-inch screens and 233-MHz chips except the 300-MHz Umax.|
"The pricing pressures that were going on in the desktop arena are being paralleled in the notebook space. Manufacturers are now starting to put pressure on each other," said David Thor, director of research with Sherwood Research, a consulting firm covering mobile PC technologies.
Toshiba introduced a new Satellite model today with a 233-MHz Pentium II processor for $1,999. HP is nipping at Toshiba's heels with a new OmniBook 2100 model that also includes the same Intel chip and a 12.1-inch display for $2,099.
Umax is taking a different tack on low- cost notebooks. The company just introduced a system with 300-MHz K6-2 processor from Advanced Micro Devices that includes a 12.1-inch active matrix screen for $1,899.
But direct vendors such as Dell Computer and Gateway have beaten everybody to the punch in the sub-$2,000 Pentium II notebook category. Dell offers an Inspiron notebook model with the Pentium II chip and high-quality, 12.1-inch active-matrix LCD screen for $1,949.
Gateway's Solo 2500 SE can be upgraded to a 233-MHz Pentium II processor, pricing it at $1,999.
Analysts say that the component prices have been dropping faster than average selling prices. Hard drives, memory chips, displays, and processors have seen large reductions in price over the past year, making notebooks cheaper to build.
As long as component prices continue their rapid decline, PC makers can continue to make respectable profits on notebooks, but if intense price competition erupts, that would negatively impact profit margins, analysts say.
Vendors have traditionally relied on sales of high-end notebooks, sometimes costing $5,000 or more, to offset sales of more mainstream notebooks. Now, with mainstream notebooks being designed specifically for lower price points, vendors will mainly offer high-end notebooks as a technology showcase, Thor said.