Twice as many U.S. households intend to buy a PC this holiday season compared with last year, and what appears to be driving them to the stores is price.
Close to 30 percent of those who said they intend to buy a computer this year plan to stay below the $1,250 price point while more than half plan to stay below $2,000. Over half of those who said they intend to buy PCs this holiday season were repeat buyers.
The poll results, which come from a joint survey conducted by TV guru AC Nielsen and International Data Corporation, illustrate both the opportunity and potential pitfalls that the sub-$1,000 computer has created for the industry.
Inexpensive computers have obviously excited consumers. If the poll results are translated into purchases, approximately 1.5 million new PC households will come online between late November and January 31, according to Bill Ablondi, vice president at IDC's New Media Group. PCs would then be found in approximately 43 percent of all U.S. homes.
"Many who thought a PC was beyond their reach financially are now coming to market. There is no question this category is expanding the home PC market," he said.
Cheap technology is also firing up interest in those homes that already have computers. Fifty-two percent of the folks who said they plan to buy a computer, but only spend between $750 and $1,249, already have a machine at home, according to the poll results.
Low-priced computers, however, generate less per-unit revenue for manufacturers and generally carry lower profit margins. According to the Nielsen poll, 30 percent of first-time buyers said they want to stay below $1,250 while 19 percent stated they want to be within the $750 to 999 range.
For current owners, 25 percent said they want to keep the price below $1,250 while 16 percent said they would stay in the $750 to $999 range.
The average price of a PC last holiday season was $1,900. This year, the average will be around $1,600, Ablondi pointed out.
Still, the appeal of high-end systems has not been lost. Forty-five percent of current owners who intend to buy computers said they planned on spending more than $2,000 this season, while another 30 percent said they plan on spending between $1,250 and $2,000.
"The repeat buyer is buying 'up market.' On average, they will spend more," he said.
Demographically, the PC market also shows signs of expanding. Sixty-two percent of those planning to spend between $750 and $999 had household incomes of $35,000 or less.
Last year's holiday season was not a banner year for PCs. Press reports detailed the features of the upcoming Intel Pentium MMX chip in the latter half of 1996. Unfortunately, the chip wasn't ready until the first part of 1997, and several analysts have theorized that gap between news on the chip and its actual release retarded holiday sales.