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Wal-Mart kicks off holiday season with $398 laptop

Retailer has started selling lower-priced Compaq laptop and discount TVs in a bid to expand its consumer electronics business.

A correction was made to this story. Read below for details.

update Wal-Mart Stores is whacking prices on PCs and TVs in a bid to expand its electronics business.

The retailing giant has started selling a Compaq laptop for $398 a few weeks ahead of Black Friday, the day after Thanksgiving and one of the biggest shopping days of the year.

Wal-Mart is also touting a 42-inch Panasonic plasma TV for $1,294 (down from $1,794) and a 37-inch HDTV LCD from Panasonic for $997 (down from $1,297).

Last year, Wal-Mart tried to jump-start its consumer electronics business with $398 laptops and desktops, as well as cheap Motorola Razr phones.

It worked, but not as well as the company might have hoped, said Stephen Baker, an analyst at NPD Techworld.

"The evidence is mixed," he said. "Their notebook did pretty well, but they still struggle with selling products over $500."

Wal-Mart's salvo won't be the last holiday price cut, Baker predicted.

"We're probably going to see a $199 notebook on Black Friday," he said. "Certainly, we are going to see aggressive prices."

This year's $398 Wal-Mart laptop comes with a 15.4-inch screen, a 3300+ Sempron processor from Advanced Micro Devices that churns at 2.0GHz, a 60GB hard drive and 512MB of memory. It's beefed up from last year's $398 notebook, which had a 15-inch screen, a 40GB drive and 256MB of memory.

It's available for purchase only in stores, a Wal-Mart representative said.

The laptop is cheaper than most others currently on the market. Wal-Mart, for instance, is selling a $498 laptop, but under the Everex brand. Everex and Hewlett-Packard, which makes Compaq computers, both actually buy their notebooks from Taiwanese contract manufacturers, but often the "brand name" companies participate a little more in the design and product specification of their notebooks.

Wal-Mart is also selling a Toshiba laptop on clearance for $598. Dell is selling a budget notebook on its site for $499.

Consumers can expect some pretty good PC bargains this year. Dell has lost ground in recent quarters to rival HP, and Dell often uses deep, opportunistic price cuts and bundles to stimulate sales. Last May, it offered a desktop with a 17-inch CRT monitor for $299.

Some analysts have said that Microsoft's plan to launch the Vista operating system in January, after the holiday shopping season, will prompt price cuts, because of fears that the stall will cause consumers to delay purchases. Baker says price cuts will indeed come, but not because of Vista.

Meanwhile, notebook sales have not been dented by widespread battery recalls by Dell, Apple Computer, Fujitsu and others. In fact, in many cases, consumers seem to have begun to look at notebooks as individual products rather than as family purchases, so all family members are getting their own machine.

PC makers will cut prices because of lower component prices and general competition.

Correction: This story incorrectly stated where consumers could purchase the $398 Compaq laptop offered by Wal-Mart. While it is advertised online, the laptop is available only in stores.