For desktop PC buyers, falling prices mean good deals

IDG News Service - Users should soon see the best bargains in years for a new desktop thanks to falling prices on the two most expensive components in a PC.

A battle between the world's two biggest microprocessor makers and oversupply in the LCD panel industry have sent prices tumbling. Users should see the markdowns showing up in stores soon.

"Over the next few months, buyers can expect to continue to see PC bargains as the industry clears stock of older inventory," said Charles Smulders, managing vice president of Gartner Inc.'s client computing group. He said the fourth quarter might also offer good buying opportunities as PC makers try to keep up sales prior to the launch of Windows Vista early next year.

Longer term, price declines and performance improvements will return to a more normal rate, meaning users should take advantage of the current window of opportunity.

Intel Corp. and Advanced Micro Devices Inc. both halved prices on some desktop PC microprocessors this week, part of a price war between the two chip makers.

The cuts included some top-end chips. For example, Intel pared its Intel Pentium D processor, the 960 that runs at 3.6 GHz, to $316, from $530, while AMD reduced the price of its dual-core Athlon 64 X2 5000+ to $301 from $696.

Price competition is the latest weapon the two companies have turned to in their fight for microprocessor market share. AMD has gained on Intel over the past few quarters due to the launch of some advanced processors, but Intel has come back recently with new offerings of its own.

Since the processor is the most expensive component inside a PC, the markdowns should translate into value for desktop PC buyers in a combination of better prices and technology.

A bonus for users is the falling price of LCD panels. Several huge companies churn out the screen part of a monitor or notebook, ensuring cutthroat competition and low prices almost all the time. But recently, flagging demand for desktop monitors and LCD TVs has caused inventories to rise and prices to drop.

Many PC buyers even put off purchases last month in anticipation of the microprocessor fire sale. The stall in demand caused inventories to rise further, cutting into company profits.

AU Optronics Corp., one of the largest LCD panel makers in the world, blamed falling panel prices for its profit shortfall in the second quarter. It expects prices to continue to decline during the third quarter.

A price rebound could come sometime in September, said Hui Hsiung, an executive vice president at AU, during its second-quarter investors' conference early this week.

The price of larger panels fell by around a fifth during the three months ended June 30, compared to the previous quarter, according to market researcher WitsView Technology Corp. The company noted the price declines on most larger sized screens continued to decline or remained flat in July.

Falling prices for panel makers should lead to more bargains for users looking for nice, sleek LCD monitors for their desktops. It's a buyers market for desktop PCs and monitors right now, and it should remain so for the next few months.