Holiday sales up for high-end PCs

The sub-$1,000 PC is firmly ensconced, but more expensive machines with the fastest processors fare well during the early part of holiday season.

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The sub-$1,000 PC is now firmly ensconced in many manufacturer's lineups, but during the early part of the holiday sales season, more expensive machines with the fastest processors have remained in vogue.

Sales of computers in the $2,000 to $2,500 price range tripled in November, accounting for over half of the month's overall unit sales volume industry-wide, according to results from a new PC Data survey. PCs in this category typically come with 233-MHz Pentium MMX or 233-MHz Pentium II processors, both of which are relatively new and expensive, or high-end PowerPC chips.

Meanwhile, unit sales of sub-$1,000 PCs still grew by 21.2 percent compared to the previous month, but constituted only 33.3 percent of the market for the month of November. That marked a decrease from 39.2 percent in October.

Buoyed by the increase in sales of higher-priced systems, Compaq Computer (CPQ) stayed ahead of Packard Bell NEC as the largest consumer PC vendor in the U.S., the survey said. Compaq had 29.9 percent of the unit sales in retail and mail-order firms surveyed by PC Data, an increase of 35.6 percent over October's figures. Packard Bell took second place with 23.6 percent of unit sales, a decrease of 5 percent from the previous month.

The news is likely to please manufacturers, at least temporarily, as profit margins have been squeezed by the popularity of the less-expensive systems. However, by next year PC prices are expected to continue their downward spiral to new lows. Some major computer vendors, including Packard Bell, are currently planning to roll out sub-$800 computers based around Pentium MMX processors. Meanwhile, those new price barriers will inevitably pull down the retail price on more powerful systems.

The survey wasn't all good news for Compaq. The Houston-based manufacturer and Packard Bell actually lost market share because sales of inexpensive systems from vendors such as CTX International were growing, according to PC Data analyst Stephen Baker.

Unheralded CTX, the North American arm of Taiwan's Chuntex Electronics, placed fifth in October with 6.8 percent of unit sales, right behind Hewlett-Packard (HWP) and IBM (IBM).

Hewlett-Packard (HP) remained in third place overall with 16.2 percent market share, while IBM boosted sales more than 85 percent from the month before to register 7.5 percent of all unit sales. Both HP and IBM benefited from the trend towards purchasing high-end PCs, Baker said.

Earlier in December, Audits & Surveys Worldwide reported that Packard Bell had inched ahead of rival Compaq in U.S. retail computer sales for October with a 31 percent market share (see related story), but most research firms continue to place Compaq in front.

In a measurement of U.S. retail and corporate PC sales, Compaq came out on top in October according to two other major market research firms, International Data Corporation (IDC) and Dataquest.