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New growth in low-cost PCs

A study shows that low-cost PC makers such as Packard Bell and Compaq are creating a new growth market for personal computers.

A Computer Intelligence market study has found that low-cost consumer PC manufacturers such as Packard Bell and Compaq Computer are creating a new growth market for personal computers.

"New PCs priced as low as $800 have stimulated a new wave of growth in the U.S. retail PC market," according to the study from the research firm.

Until the February entry of Packard-Bell, Compaq, and Monorail into the sub-$1,000 PC market, the U.S. retail segment had been steadily declining for the last three months, according to Computer Intelligence.

In February, largely because of the introduction of sub-$1,000 PCs from these companies, the sales of desktop and portable PCs in the U.S. retail market saw a year-to-year unit increase of six percent over February of 1996.

"We were looking for MMX-equipped machines to kick in demand, but in reality it is the sub-$1,000s that have done the trick," Computer Intelligence analyst Matt Sargent said.

Previously, PC makers had focused on consumer electronics stores and mass merchants to sell sub-$1,000 computers. With consumers shifting their attention to PC superstores, several manufacturers placed low-cost models there as well, with immediate success, the study says.

The top-selling model in February in PC Superstores was the Packard Bell C115. Those sales boosted Packard Bell's market share in an area previously dominated by Compaq and where Packard Bell had problems, according to the study.

In December, Compaq had the largest market share at PC superstores with 35.9 percent. In February, that shrunk to 28.8 percent. Meanwhile, Packard Bell saw its share jump from 9.6 percent in December to 25.7 percent in February.

The combined market share of Packard Bell NEC exceeded Compaq and reached 30.5 percent in February. Packard Bell and NEC have merged their PC operations in the United States.