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Start of school year brings PC deals

With millions of school kids headed back to the classroom this week, PC makers are engaged in some subtraction lessons in an attempt to spark last-minute sales.

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With millions of school kids headed back to the classroom this week, PC makers are engaged in some subtraction lessons in an attempt to spark last-minute sales.

Since early last year, desktop PC makers have been relying heavily on rebates and other incentives to entice buyers, but they've intensified their efforts since mid-July, pairing price cuts of $50 or higher on most retail desktops with rebates and cash-back promotions.

To be sure, PC prices fall continuously--or manufacturers add additional features to maintain a certain price point. But analysts say that after two years of stagnant sales, manufacturers and retailers are more aggressive this season.

There are so many "steals," buyers "should be wearing masks," said Toni Duboise, desktop analyst with research firm ARS.

Rhetoric aside, potential buyers can open their Sunday paper or fire up their Web browser to find mail-in manufacturer rebates of $150 to $200, along with perks from retailers such as special financing, $30 to $100 in instant rebates and gift cards of $50 to $100. Notebook PCs are being offered with similar promotions, but the rebates on these machines tend to be less generous.

PC sales in June were much improved after slowing in April and May. But the early results for the important back-to-school season don't look particularly good, said Steve Baker, an analyst with research firm NPDTechworld.

"The last back-to-school was terrible. What we're striving for here is...slightly above terrible," Baker said. "Since (July) we've seen a lot more aggressive prices and also some more rebates and special financing deals--the whole gamut of promotional things to move products."

Although the back-to-school season is winding down, many of the deals will last at least through the end of this week, while others will remain available through the end of September.

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Patient buyers could do even better, as prices could fall even further over the next few weeks as manufacturers pass on new cuts from chipmakers Intel and Advanced Micro Devices. New models are also on the horizon--such as the Profile 4, Gateway's new all-in-one desktop--possibly leading to deeper discounting to clear inventory.

Intel, which launched its 2.6GHz and 2.8GHz Pentium 4 chips for desktops Monday, is expected to cut prices Sept. 1. Rival AMD, which announced its new Athlon XP 2400+ and 2600+ processors last week, has already dropped prices by as much as 20 percent.

As for current sales, manufacturer mail-in rebates range from about $150 to about $200 on a PC when purchased with a monitor and a printer, ARS's Duboise said. These deals often can be combined with weekly promotions from retailers.

This week, for example, retailers such as Best Buy and Circuit City featured price cuts of $80 to $100, combined with instant rebates of $30 to $100 and mail-in rebates of $100 to $200.

Hewlett-Packard's 2GHz Pentium 4-based Pavilion 752n desktop with a 17-inch HP MX70 monitor and a DeskJet 3820 printer is available for $1,019.97 from Best Buy after the retailer combines a $100 price cut, a $30 instant rebate, a $200 Best Buy mail-in rebate and a $200 mail-in rebate from HP.

The same computer bundle is available at Circuit City for $1,119.99, after rebates, mainly because the retailer chose to offer a $100 instant rebate in comparison with Best Buy's $200 mail-in offer.

Some skeptics might believe that manufacturers are marking up the machines, then offering rebates to make them look more attractive. But average selling prices on desktops have declined steadily over the last few months, to $801 in June, according to NPDTechworld data.

"I think the (manufacturers) are willing to take a hit in order to entice consumers to market," Duboise said. "Let's just say the buyer's market continues."

Dell hell
On the retail front, the cuts also reflect an effort on the part of businesses to guard against aggressive promotional campaigns by direct-sellers Dell Computer and Gateway.

Dell runs a wide range of promotions on its desktops. During the past few weeks, the company has offered $50 instant rebates, $100 mail-in rebates, free component upgrades--such as doubling a PC's memory allotment--and free shipping on its desktops. The company is offering a free upgrade to a CD-rewritable or DVD drive on desktops, and a free monitor upgrade on Dimension 4500 and 8200 models.

Dell has also used ads featuring "Steven," its slacker television pitchman, and a $50,000 giveaway to entice buyers to its back-to-school deals.

Gateway has been offering $100 mail-in rebates or free versions of Microsoft Office for students on its 300SE and 500SE desktops as well as on its 1450SE notebook.

That's spurred others to action, Duboise said. "HP has been very aggressive. Not only do they offer bundled rebates, but you've seen some instant savings...anywhere from $30 to $50 in in-store instant savings."

Emachines has also stepped up its promotions. The company has been offering a combination of instant savings and mail-in rebates, usually in the range of $30 to $70, on its T1220 and T1440 desktops, when bundled with monitors and printers.

Apple Computer has joined in, too. The stalwart of the education market is offering various promotions, including a free Epson printer, to customers who purchase an iMac, iBook or eMac through the end of September.

Although manufacturers typically run rebate programs for a month or more at a time, special rebates, instant savings and sales crop up on a weekly basis at retail, while Dell changes its promotional offerings regularly.