Cheap computers and affordable peripherals should conspire to make this holiday season a happy one for retailers and shoppers alike.
Computer sales are expected to be about 25 percent higher or more than last year's fourth quarter. Among the items expected to sell well are computers priced less than $1,000, inexpensive Pentium II PCs, $99 color scanners, and possibly handheld devices.
Although the holiday shopping season often represents the period when new products and technologies drive the market, one of the items appeared in the summer. Namely, the sub-$1,000 PC, which is dominated by such manufacturers as Packard Bell and Compaq Computer.
"It appears it will a big quarter. It will be up over 25 to 30 percent over last year," said Matt Sargent, an analyst with Computer Intelligence. About 9.2 million computers will be sold in the U.S. during the quarter, according to Sargent, and a good portion of those will be low-cost machines.
Home systems using Intel's the Pentium II processor, which have also been falling dramatically in price, are expected to sell well, he added. (Intel is an investor in CNET: The Computer Network.)
Compaq, for example, is selling a 4824 Presario with a 233-MHz Pentium II system for $1,799. It packs in a 6.5GB hard drive, 32MB of memory, a CD-ROM drive, and a video card with 4MB of memory.
Potential buyers might also want to keep their eyes on Toshiba, which is selling off its Infinia computers after announcing it will exit the consumer desktop market. A 7260 Infinia with a 266-MHz Pentium II processor, a 6.4GB hard drive, a CD-ROM drive, a 56-kbps modem, and 64MB of memory is priced at $1,999 at online reseller Insight Direct.
At the other end of the spectrum, an HP Pavilion 3100 is selling for $899 at CompUSA. It comes with a 166-MHz MMX Pentium processor, 16MB of fast synchronous DRAM memory, a 2.0GB hard drive, a CD-ROM drive, a modem, and a 3D graphics chip.
Notebooks can be a bargain too. For instance, notebooks with 12.1-inch active-matrix LCD screens--which buyers had to shell out at least $2,500 for recently--are now well below $2,000 in some cases. Compaq's Armada with a 12.1-inch active-matrix screen, a 133-MHz Pentium processor, and a 1.4GB hard drive is selling for just below $1,700 at online resellers such as Computer Discount Warehouse.
A major reason for the sales surge is good timing for the Pentium II, Sargent said. Intel touted Pentium MMX chips late last year but didn't release them until 1997, leading customers to delay purchases. "There was no driving factor to buy," he said.
Now, however, retailers are riding the publicity generated about low-cost machines.
For the gadget guys in the family, "PalmPilots are still hot. The Rex is hot," said Randy Giusto, mobile analyst with International Data Corporation.
The Rex, or Rolodex Electronics PC Companion from Franklin, is a card-sized calendar and organizer that made its debut at the Comdex trade show in Las Vegas. A small screen allows users to view appointment calendars, phone lists, and other information. The Rex slides into a computer for synchronization.
Although users can't input data through the Rex, it only costs $150 and does, in fact, fit into pockets. It weighs 1.4 ounces and is less than .25 inches thick. Unfortunately, it's not due until January.
For people wondering whether they should buy a Windows CE handheld computer, Compaq is making it that much harder to resist. The Compaq PC Companion C120 is now selling for a mere $99 at CompUSA. These devices typically cost between $400 and $700.
Giving the gift of scanners will represent another strong holiday trend. Color scanners are now selling for $99 and some manufacturers are offering $25 rebates on top of that, according to Dave Freeman, president of Advanced Computer Products, a Southern California reseller.
"This is one of the years that scanners are going to be a hot consumer item," said Carl Howleck, an analyst with ARS. "Suddenly, a home user can get one of these and start playing with them."
Scanners, moreover, have a fairly obvious appeal. Consumers either know what they are or at least pick up fairly quickly. Mom, for example, can use it to digitize photographs and save them on her computer.
Freeman, who also sees a strong season in cheap computers, believes that other manufacturers have missed their marks.
"The interest in DVD is going up, but the content is still a problem. There's not enough of it," he said. "It would be very interesting if someone made a price move on digital cameras, but that hasn't happened yet."
Pricing, product delays, and the general fickle nature of retail mean that this likely will not be the season for digital cameras or alternative Web access devices like WebTV.
"WebTV certainly isn't going to be this year's Tickle Me Elmo," deadpanned Greg Blatnik, vice president at Zona Research in Redwood City, California, after learning that the company would not release its new generation of TV set-top boxes before the holidays.
The company recently said that WebTV Plus, the next generation of its set-top box that will allow TV and Web viewing, will not be released generally until after January 1. Until then, customers will have to make do with "classic" WebTV, which allows users to either watch television or browse on the same set.
The delay "is no big deal in the cosmic scheme of things, but in terms of having a hot product for the key buying season, yes, they missed an opportunity," Blatnik said.
Even when WebTV Plus emerges in numbers, the company will only be starting out on a difficult marketing journey, he contends. "The convergence of these two mediums is elusive at the moment," Blatnik said. "The service needs to be compelling enough to be irresistible and there is not a formula yet."
Meanwhile, digital still-picture cameras are pricey and the technology is still maturing. These cameras allow users to transfer pictures to their PC for storage and processing, allowing them to be viewed on screen or printed out with special devices from such companies as Hewlett-Packard.
Digital video cameras are even more expensive, such as a model made by Sony for $2,000.