Notebook prices breaking the $500 barrier

IDG News Service - Bargain hunters out and about in U.S. retail stores are having no trouble finding inexpensive notebooks, as PC vendors aggressively promote notebooks for under $500, according to research released this week by Current Analysis Inc.
Individual vendors dipped below the $500 mark with low-end notebooks earlier this year, but four major retailers as well as PC market leader Dell Inc. all had sub-$500 notebooks displayed prominently on store shelves and in circulars over the past weekend, said Sam Bhavnani, principal analyst at Current Analysis in San Diego.
PC prices in general have come down over the past few years, but desktop prices have largely stabilized, Bhavnani said. With the continuing demand for notebooks to replace aging desktops, retailers such as Best Buy Co. and CompUSA Inc. are becoming more aggressive with notebook sales and promotion, he said.
Vendors are following suit as they take advantage of decreases in the prices of components such as dynamic RAM (DRAM) chips and flat-panel displays, Bhavnani said.
"Notebooks are reaching the maturity that desktops reached a few years ago," Bhavnani said. He predicted that vendors and retailers will continue to push each other to lower prices in the second half of the year, which is usually the busiest shopping period for PCs.
For example, Toshiba Corp. offered a $449 version of its Satellite A85-S1072 notebook with a 15-in. display, Intel Corp.'s Celeron M 360 processor, 256MB of DRAM, a 40GB hard drive and a DVD-ROM/CD-RW drive at Best Buy. Over at CompUSA, Acer Inc. had a $499 AS3502WLCi notebook on sale with a Celeron M 360 processor, a 15-in. widescreen display, 512MB of DRAM, a 40GB hard drive and a DVD-ROM/CD-RW drive. Dell's $499 Inspiron 1200 came with a 14-in. display, a Celeron M 350 processor, 256MB of DRAM, a 30GB hard drive and a DVD-ROM/CD-RW drive.
Those prices, however, are reached only after several rebates. To get the low price on the Toshiba laptop, customers needed to complete the paperwork on a $200 manufacturer's rebate and a separate $150 mail-in rebate offered by Best Buy. CompUSA required customers to mail in rebate forms for an additional $200 in savings on Acer's notebook, while Dell needed rebate paperwork to receive $150 in savings.
Rebates allow vendors and retailers to offer seemingly low prices but take advantage of the fact that only about half of all customers bother to fill out and send in rebate forms, Bhavnani said. Some retailers and vendors are moving toward instant rebates that are automatically deducted at the time ofpurchase, although those are naturally more expensive to implement, he said.
The recent promotions are geared to the pending start of the school year in the U.S. They also allow companies to test promotional strategies for the fourth-quarter holiday shopping season, which is the busiest part of the year.