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Price cuts worry used-PC sellers

New sub-$1,000 PCs may be encroaching into the market for used computers, according to a new study.

    New sub-$1,000 PCs may be eating into the market for used computers, according to a new study.

    A total of 2.4 million used computers were acquired by home and self-employed PC users last year in the United States, a market driven by rock-bottom prices where many units were sold for under $500. But an emerging category of new sub-$1,000 PCs is encroaching into the used computer market, according to a study released by Computer Intelligence (CI).

    Half of the used computers were bought for under $500, according to the study. Almost three-quarters were priced under $1,000. In the new computer market, only 10 percent of computers were bought for below $1,000 during 1996.

    A CI analyst noted that until late 1996, it was difficult, if not impossible, to find a new PC in the sub-$1000 price bracket. However, the increasing number of PCs available for less than $1,000 will affect the used computer market, according to Mark Nelson, manager of the Consumer Research Group at CI. "The used market will tail off because of the sub-$1000 new computer."

    Their low cost made used systems a strong option for PC buyers on a tight budget, and meant that some users who previously might not have been able to purchase a computer could buy one. CI's study set the median household annual income of used computer buyers at $33,500, nearly one-third lower than that of new PC buyers, who averaged $48,900.

    Most used computer buyers bought their systems for basic tasks such as word processing. Internet access was not cited as a major application. "In general, used systems aren't configured well to do online access," said Nelson.

    Predictably, the average used PC trailed new PCs in technology. While more than 80 percent of new PCs sold in 1996 used an Intel Pentium or Pentium Pro, or a Motorola or IBM PowerPC processor, only 13 percent of used computers had the latest chips.

    The older Windows 3.x operating system was the OS on the majority of used systems, with DOS also a common system software.