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Gates says $500 PC is within reach

Bill Gates says PC prices will take priority over power, eventually dropping to $500.

The $500 PC is no myth, according to Bill Gates.

In a speech at a Harvard University conference today, the Microsoft chairman and CEO said he believes that lower prices will take priority over more power in the PC market, with prices eventually dropping to the $500 level for full-featured computers, according to the Associated Press.

Gates didn't specify when he thinks that PCs will hit that mark--something of a magic number used throughout the industry--but said that such new communications technologies as faster modems and fiber-optic networks will drive computer manufacturers to reduce prices instead of continuously adding more powerful features.

The Microsoft chief made his remarks as much of the industry focuses attention on new hardware and software aimed at developing stripped-down Internet computers. Such devices, which would be limited to use of the Net and basic word-processing functions, are estimated to be within the $500 reach.

Gates said public networks will continue to develop rapidly in the United States, thanks to the federal Telecommunications Act, which allows competition between telephone and cable companies. But Gates also noted that a balance would have to be achieved between undeveloped countries and their technologically rich counterparts before new communications will become truly widespread, according to the AP report.

To that end, Gates estimated that it will be about 20 years before his vision of a "world of high-speed connectedness" is achieved.