With Dell Computer and Hewlett-Packard grappling for the--a position currently held by Dell--the two manufacturers are becoming more aggressive in using low prices to lure buyers.
But analysts caution that consumers should look closely at what they are getting, because some of these PCs initially lack features found in higher-priced systems.
Hewlett-Packard has launched several new low-price HP Pavilion and Compaq Presario desktop PCs recently. Its desktops now. HP also announced a special that includes a monitor and an inkjet printer for $497 (after a $150 rebate). Both offers are available via HP's HPshopping Web site or at its kiosks in retail stores.
Dell fired back this week with a redesigned, entry-level Dimension 2400 desktop and a special back-to-school bundle that pairs the machine with a flat-panel display for $699 (after a $150 mail-in rebate). The bundle offer can be found on Dell's Home and Home Office Web site.
As a result of the tit for tat, a consumer who is willing to shop around could order a PC with a Pentium 4 processor, a CD burner and a 15-inch flat-panel display for between about $700 and $800, after rebates.
"It's still a buyer's market, there's no question about it. We've been saying that for the last two years, but it's still true," said Toni Duboise, analyst with ARS.
While Dell does not plan to match HP on price, the company is countering HP with aggressive back-to-school offers, said Dell spokesman Lionel Menchaca.
Dell's Dimension 2400 bundle, priced at $849, includes a 2.2GHz Pentium 4, 128MB of RAM, a 40GB hard drive, a CD-burner and a CD-ROM drive, along with a 15-inch flat-panel monitor, speakers and a two-year warranty. The $150 rebate drops its price to $699. The basic promotion will last through August, Menchaca said.
In addition, Dell is likely to add free shipping, memory upgrades and other special incentives on a rotating basis.
The new Dell offer can be compared closely with HP's Presario S4000V bundle, which brings together a 2.2GHz Pentium 4, 128MB of RAM, a 40GB hard drive, a CD-ROM and a DeskJet 3420 printer for $497, after a $150 mail-in rebate.
While HP's Presario bundle starts at a lower price, it swings the other way when configured to match the Dimension bundle by adding a flat-panel monitor in place of a 17-inch cathode-ray tube display. Dell's price, without the printer, is $103 lower than HP's. But, after adding a Dell printer, the bundle's price is only $35 less.
PC buyer be aware
A buyer must go over the details closely to determine whether or not a lower price represents a superior deal.
"You have to look at exactly what you are buying," Duboise said.
Consumers must figure in shipping charges, calculate the value of special offers and then determine if any essential features are missing before they buy.
Dell and HP run free shipping promotions often. Otherwise, shipping adds about $100 to an order.
But PCs purchased directly from HP and Dell don't always include a floppy drive. The base Dell Dimension 2400 bundle leaves out a floppy, charging $20 to add one. The Presario S4000V bundle includes one.
Reading the fine print also shows that Dell's Dimension 2400 bundle includes a minimum of a two-year warranty, while HP offers a one-year warranty option on the Presario bundle.
The warranty offer is an example of Dell padding the price of its desktop slightly, Duboise said. "This is still a very good offer, but you can't strip it lower (in price) than that it already is and still get the $150 rebate."
Customers may also want to step up a bundle to include at least 256MB of RAM and a 60GB or 80GB hard drive when ordering. This will add roughly $150 to the price of either PC package.
The urge to upgrade is what often prevents $349 or $399 PCs from selling in large numbers to consumers, Duboise said. The desktops offer the performance for basic tasks, such as e-mail, but consumers usually opt for more power, she said.
"The sweet spot is now between $700 and $800 (without a monitor). That is what you want to spend for your (desktop) computer, these days," Duboise said.