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Many would pay more for PCs

A new report finds that most consumers paid less than they had planned for personal computers during the holiday buying season.

A new study says computer makers may be pricing some systems more cheaply than they need to, while others seem to be more successful at drawing in buyers at higher prices.

Most consumers paid less than they had planned to spend for PCs in the holiday buying season, according to a survey of households by MarketMaps, a research and consulting firm based in New Canaan, Connecticut.

This report comes as PC makers are scrambling to adjust their business strategies as revenues shrink in the face of ever cheaper PCs. Major PC makers have recently warned of lower than expected revenues and many are looking to new markets to beef up the bottom line. IBM has gone as far as saying the "PC is dead."

Only 12 months ago, a $900 computer was considered the cheapest offering from a major PC maker, but now this is the high end of a segment which ranges as low as $300.

Buyers paid an average $1,393 for PC and monitor, or "approximately $100 less than the average?buyer had planned," according to the report. One in five consumers who bought a PC during the holidays said "they paid less than they expected to."

"PC makers are leaving money on the table," said Bill Ablondi, founder of MarketMaps and author of the study.

He added, however, that PC makers can build loyalty and move their customers to pricier models when they purchase next. "It's important at the low end to make sure buyers have a good experience [and] good service because when they come back they may buy more expensive machines," he said.

"My advice is not to chase Emachines and Microworkz over the cliff."

Both of these companies are selling PCs below $600. Emachines is emphasizing $499 and $599 boxes, while Microworkz has been marketing a $299 system slated to be available in mid-April.

The survey revealed that people buying for a second or third time spent 38 percent more than those buying a brand for the first time.

Gateway, Compaq Computer, and IBM "did the best job of capturing those who had no brand preference prior to purchasing, thereby becoming the top selling brands overall," the report said.

Gateway was most adept at getting people to buy pricier PCs: More than 75 percent of its customers spent $1,500 or more for a PC and monitor. For Compaq, the situation was quite different. A total of 71 percent of Compaq buyers spent less than $1,500. Those that said they paid less than expected spent an average of $900. The report also said that price was the No. 1 reason overall for people choosing the brand they finally bought.

Other points of interest in the report:

  • Total spending for PCs and related monitors reached $7.8 billion with one third of the spending going for systems costing $2,000 or more.

  • Spending for software, printers, scanners, joysticks, and other products associated with the PCs already owned or new ones totaled $7.5 billion during the holiday season.

  • Of those with a brand preference prior to buying, 29 percent purchased a brand they did not expect to.