Computer Makers Include Domestic Market In Cheap PC Plans

HP and Gateway take a page from the playbook of technology companies selling cheap PCs overseas by marketing inexpensive machines domestically.

Darrell Dunn, Contributor

May 26, 2006

2 Min Read

Technology companies are rolling out expansive programs to try to reach an estimated 3 billion people worldwide who don't have computer access--but everybody loves a deal, and interest in inexpensive computers isn't limited to developing countries.

"We have a substantial number of people in [the United States] who have never owned a PC," says Rob Enderle, an analyst with the Enderle Group. "They have incomes that make it difficult for them to buy a PC, or they have families where they'd like second or third PCs for home or kids."

During last year's Black Friday, the big shopping day falling after Thanksgiving, Wal-Mart promoted $378 Hewlett-Packard Pavilion laptops, all of which quickly sold out. The campaign was essentially a "loss-leader" effort aimed at tempting shoppers into stores by selling the system at little or no profit margin. But Wal-Mart also is initiating a "build-your-own" computer initiative that allows customers to choose between various computer components to create their own low-cost machines.

Entering the domestic low-cost consumer PC market is a key to Gateway's ongoing attempts to revitalize itself and motivated its acquisition of eMachines in 2004. EMachines offers PCs using Advanced Micro Devices' Sempron processor for as little as $249.

"When you start pushing PCs in the sub-$200 category, that gets into iPod territory, and it becomes almost an impulse item," Enderle says.

HP believes there's a growing market for "cost-conscious" PCs for the enterprise as well. In May, HP introduced the dx2200 business desktop priced at $349. Powered by a Pentium 4 processor and using a Microsoft Windows XP operating system, the dx2200 includes a DVD writer and integrated graphics.

Brian Schmitz, HP's director of product marketing for business PCs, says the company remains in "close touch" with Intel on that company's new World Ahead PC initiative. HP shares Intel's "view that customers want a more feature-rich experience" than is offered by other cheap PCs currently on the market. "We are cautiously optimistic about working with them," he says. "We have no love of inventing it all ourselves."

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