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Average PC price below $1,300

The average price continues to fall even though the market for sub-$1,000 has slipped.

Spurred by growing sales, the average purchase price of a personal computer fell below $1,300 for the first time last quarter, despite a slight dip in the market share of the sub-$1,000 PC, according to new report by Computer Intelligence.

Consumers lured by falling prices and a desire for

Average selling price
of desktop PCs
in US retail market
Month 1996 1997 Percent
Jan $1,836 $1,642 -10.5
Feb $1,749 $1,543 -11.8
Mar $1,790 $1,413 -21.1
Apr $1,788 $1,443 -19.3
May $1,782 $1,451 -18.6
Jun $1,711 $1,405 -17.9
Jul $1,628 $1,424 -12.5
Aug $1,666 $1,341 -19.5
Sep $1,716 $1,386 -19.2
Oct $1,745 $1,381 -20.8
Nov $1,645 $1,329 -19.2
Dec $1,623 $1,296 -20.2
Source: Computer Intelligence
Internet connectivity drove fourth quarter 1997 sales up by 25 percent over the same period last year. The growth capped a year in which average retail prices of PCs dropped almost 20 percent, the survey noted.

Not surprisingly, price-conscious consumers fueled that growth. "There were a number of factors driving that," said Aaron Goldberg, executive vice president for CI. "The Internet has become a reality in many people's lives, and price points were at levels they had never been before."

While PCs with a price point under the $1,000 mark comprised around 30 percent of the market in the fourth quarter of 1997--down from an earlier high of a bit more than 40 percent--the average price continued its yearlong fall. The sub-$1,000 market claimed less than 10 percent at the beginning of the year.

Part of the low-cost market's decline owes to the fact that retailers don't market sub-$1,000 PCs as aggressively as PCs in the $1,000-$1,250 price range, CI stated. Sub-$1,000 systems have notoriously low profit margins.

Compaq placed first in the sub-$1,000 race, taking over 44 percent of the fourth quarter market. Packard Bell finished second with 35.3 percent, while Hewlett-Packard jumped from a 0.3 percent share in September to 15.2 percent of the market in December.

Two companies that need to follow HP's example are Apple and IBM, who combined made up 2.7 percent of the market in December, Goldberg advised.

"HP finally put a good low-end product in the mix?Apple only has CompUSA left and IBM's on the fence with their consumer business. They can't let it get away from them," he said.