Systems with a 300-MHz Pentium II sold for around $4,000 at the end of August. Now Micron and Dell offer systems similar to the Gateway G6-300 "Best Buy" PC for between $2,500 to $2,600, and NEC is selling a 300-MHz Pentium II machine for close to $2,100 with a 15-inch monitor.
Most of the cost parings that have been squeezed out of these systems results from reductions in two main component prices, according to Dean McCarron, principal analyst with Mercury Research.
"The biggest factor in the price declines is processor price reductions. The other is the price of RAM [random access memory]. RAM pricing saw another downward blip in the last six weeks, so that freed up some system prices. Most other components such as CD-ROMs have been holding pretty much steady [in cost]," McCarron noted.
At the end of October, Intel's fastest chip, the 300-MHz Pentium II, dropped to $738 from $851, a reduction of 13 percent.
Intel is not expected to drop prices on its processors before year's end, so McCarron thinks "Prices [on systems] shouldn't drop much more by Christmas. I don't expect any major shifts until after February."
The G6-300 "Best Buy" PC is an AGP-ready system that includes a 3D graphics accelerator, 32MB of memory, a 4GB hard disk drive, a 24X CD-ROM drive, and 56-kbps modem in addition to the 300-MHz Pentium II processor and monitor. The system is currently available.