Adding on Extras
Aside from lower prices, manufacturers are packing in extras they hope can bring in sales. Lenovo, for one, offers ThinkVantage technologies, which it says cuts the cost of managing its PCs, helps avoid malware attacks and offers benefits such as easily transferring a users settings to a new PC. Meanwhile, Gateway will open a new customer contact center in South Dakota for its business and consumer direct customers.Dell, which pledged to cut its PC prices following its lackluster first fiscal quarter performance, said on July 13 that it would do away with rebates and simplify its pricing for small businesses and consumers in the United States. Gateway shifted its direct-to-consumer sales strategy toward PC bundles. It now sells consumer PCs starting at $799 via its Web site, leaving retailers to offer its lower-priced eMachines-brand and Gateway-brand PCs. Indeed, manufacturers are putting more emphasis on large, cross-company deals that combine PCs, servers, storage and a myriad of services. "I think the marketplace as a whole is highly competitive," the IT director said. Manufacturers are "making it very attractive across the board to purchase a lot from them." While deep price cuts will probably amount to reduced revenues and profits for PC makers, the coming years could mean better PCs for businesses and consumers. Intel and AMD are offering lower-priced dual-core processors, for one, while memory allotments continue to rise, hard drive capacities grow larger and other technology comes down in cost. The result is that PCs tend to deliver more oomph in 2006 than they did in 2002 or 2003 at lower prices. During November 2002, for example, Gateway launched desktops using Intels then new 3.06GHz Pentium 4, which cost $1,500 or more each. The company offered a Gateway 500XL desktop with the chip and 256MB of 333MHz DDR (double data rate) SDRAM (synchronous dynamic RAM) memory, for $1,449. Today, a midrange Gateway E-2600D desktop fitted with Intels dual-core Pentium D 930 processor, 2GB of DDR2-DRAM (double data rate 2 dynamic random access memory), a 250GB hard drive and a CD-RW drive lists for $1,179 sans monitor on Gateways Web site. Meanwhile in their efforts to eek out profits, PC makers have also invested in improving hardware quality, particularly in their notebooks. PC reliability is on the upswing. Click here to read more. Gartner has seen about a 25 percent improvement in hardware reliably over last 18 months, Fiering said. "That aint altruism," she said. "Investing a few pennies up front in reliability and quality assurance results in dollars saved at the back end in warranty and support costs." Still, "It doesnt change the underlying dynamic that the market is slowing. A lot of replacements are donethe huge surge of everyone buying in sync is now slowing down in sync," Fiering said. Gartner has projected that 2006 will see PC shipments rise by 10.7 percent to 234.5 million in 2006. During 2005, PC unit shipments grew 15.5 percent to 211.8 million, it said in a statement. IDCs forecast calls for PC unit shipments growth to reach to reach 10.8 percent in 2006 and 11.7 percent in 2007, with unit shipments reaching about 230 million and about 257 million, respectively. Meanwhile, revenue will be more meager, rising between 3 and 5 percent annually between 2006 and 2010, IDC said. Check out eWEEK.coms for the latest news in desktop and notebook computing.
Dell and Gateway have also changed the way they target consumers as well as small businesses, to some extent.