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High monitor prices buck PC trend

The relatively stagnant market for desktop displays stands out as an anomaly in an era of rapidly falling PC prices.

Average personal computer prices have plummeted in the last several years in spite of the fact that PCs continue to get better and faster, but the market for desktop displays remains a curious anomaly in an era of frenetic price-cutting.

Had cathode ray tube (CRT) monitors followed PC price trends,

Falling monitor prices?
Year 15-inch price 17-inch price
1994 $444 $900
1995 $450 $860
1996 $392 $780
1997 $333 $632
Source: Stanford Resources
right now there would be a 25- or 30-inch monitor sitting on your desk that costs less than a good 15-inch tube that goes for around $350 today.

In January of 1994, a new PC with a poky 60-MHz Pentium processor, only 8MB of memory, and a small 450MB hard drive was a whopping $3,500, according to trade magazines. Today, feature-laden PCs with 20 times the hard drive capacity, four times the amount of memory, and the newest and fastest Pentium II processors running at 300 MHz are being released at prices as low as $2,000 from major vendors.

By January 1997, the average retail price for a desktop PC was $1,642, and declined another 20 percent by year's end, according to data from Computer Intelligence.

On the other hand, the price of a typical 15-inch monitor dropped 15 percent over the same period, yet didn't gain significant performance advantages over previous models. As more customers started buying 17-inch monitors in 1997--resulting in increased production--volume prices dropped 19 percent from 1996 to 1997, but again, the performance of the systems was roughly equivalent.

Over time, there have been modest price drops: In 1994, the average price of a 15-inch monitor was $444, and the average price of a 17-inch monitor was $900. In 1997, Stanford Resources says, prices reached an average of $333 and $632 respectively, with prices ranging about $100 in either direction for a 17-inch monitor.

Still, analysts say that a number of factors will prevent companies such as Sony, Sharp, NEC, and ViewSonic from soon following PC industry trends, if ever.

"You can increase processor performance exponentially without increasing the weight of the product, but when you blow up the screen size, the monitor weighs a lot more, which means when you have to ship it anywhere, it costs more," said Rhoda Alexander, a senior market analyst for Stanford Resources, a firm that tracks the display industry. Since the monitor is larger, more raw materials such as glass are used, which also adds cost to the system.

There are other factors too. "What's important to remember is that when you are talking about [processor] prices relative to display costs, a lot of [display] price drops happened in the late 1980s and early 1990s," Alexander said.

The display industry is a relatively mature one that has already realized manufacturing efficiencies in commonly sold products, such as the 15-inch monitors, analysts say. As a result, changes in price and monitor performance are much more gradual than in the PC industry.