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PC makers reap grim end-of-summer harvest

Preliminary numbers from research company NPD Intelect show sales down almost one-third in August and September compared with last year's bumper returns.

Retail sales of PCs in August and September are best described by a four-letter word: grim.

Preliminary numbers compiled by research company NPD Intelect show sales down 30 percent year over year in August and 30 percent or worse year over year in September, according to analyst Stephen Baker.

As has been the trend throughout the year, the lower sales come mostly from the slowing economy, but the Sept. 11 terrorist attacks also hurt retail PC sales, Baker said.

The PCs that are selling are generally priced in the $500-to-$1,500 range, with those priced at about $800 selling the best of all. For $800 or so, a consumer can generally buy a desktop with a 1GHz or faster Pentium III or Athlon processor, 128MB of RAM and a CD-RW drive. Hewlett-Packard, for example, offers a Pavilion 7935 desktop with a 1.3GHz Athlon, 128MB of RAM and a CD-RW drive for $749.

A disadvantage for the August and September sales numbers is that they are being held up against an imposing yardstick: The year-ago period marked the last two months of 2000's high-flying PC market. That makes the declines of August and September 2001 look somewhat higher than they would if compared to a less bountiful year. But the theme is, overall, a decline in sales.

Baker expressed some optimism that fourth-quarter sales could improve, thanks to a slight uptick that could come from holiday sales and from promotions coinciding with the launch of the Windows XP operating system at the end of October. Some companies, including Compaq Computer, Dell Computer and Gateway, have already begun selling PCs with the system software pre-loaded.

Windows XP itself is unlikely to spur sales at this point, Baker said, but "the promotional activity around it will generate traffic (in stores) and interest, increasing the pool of buyers."

Still, barring an unforeseen leap in consumer confidence, fourth-quarter sales are likely to fall by low single-digit figures year over year, he said.

Looking ahead to 2002, retail is likely to see continued torpor through the first half of the year. After that, assuming that consumers are following a three-year replacement schedule that began in 1999, the market could see improvement.

"I think midyear next year we ought to see things turn around," Baker said.

NPD's final sales numbers for the two months are expected soon.