How Low Can PC Prices Go?

In an intersection of PC pricing, the cost to make laptops and desktop models has gotten so low that the retail price of each are hovering very close together.

Take for example the One Laptop Per Child (OLPC) Foundation. The group headed by Nicholas Negroponte is considering selling a version of its hand-crank laptop for $350. Conversely, PC-maker Everex is currently offering its full-featured PC in Wal-Mart stores for $298.

While OLPC, which recently said it costs $175 to make its XO laptop, has watched the price of its laptop gradually escalate, Everex and other PC manufacturers have been driving down the prices of their PCs.

OLPC released its XO laptop for mass production this week, setting the stage for an October delivery of the device, which is targeted for use by children everywhere including those in rural and primitive environments. The OLPC hopes the move to mass production will drive down prices for its XO laptop.

OLPC has long had a target price of $100 per laptop, but this week an OLPC official said the foundation is also considering selling the machine for $350 in commercial markets.

The Everex GC3502 is just hitting Wal-Mart stores this week, said Paul C. Kim, Everex' director of marketing, in an interview. The $298 price tag is somewhat of a breakthrough for a full-featured PC offered for sale in a bricks-and-mortar store.

"We're not selling this below cost," he said although he admitted the profits would likely be slim. The Everex machine features a 1.5 GHz VIA C7-D processor, 1GB system memory, 80GB HD, and a DVD-ROM/CD-RW optical drive. The Model GC3502 comes preloaded with Microsoft Windows Vista Home Basic operating system and the configuration includes OpenOffice.org 2.2 office productivity software.

"It has a green angle and a budget angle," said Kim explaining that the VIA processor draws less than 2W on average that typically can save $10 a month in electricity costs.

While a comparison of the OLPC's XO computer with Everex' GC3502 is akin to comparing apples and oranges, the pricing narrative shows that PC costs and prices continue to drop for commodity machines like the GC3503 while OLPC struggles to reach its goal of providing a custom-built $100 laptop.

While the OX was developed with the goal of providing an inexpensive PC for the world's disadvantaged children, the foundation developed some unique and appealing features along the way that the OLPC believes may have appeal in commercial markets. For instance, the XO's revolutionary display is readable in bright sunlight and it is environmentally tough and capable of holding up in severe weather conditions; alternative power sources including a pull cord and solar panel mean that the XO can continue operating in situations where traditional PCs can't.

"We're testing this concept," said Kim, observing that Everex hopes to build on the features of the GC3502 that prove to be most popular. "We're testing OpenOffice.org and we're trying out the Linux platform. If everything goes well, we'll expand (features) in the future." OpenOffice.org has word processing, spreadsheet, database and presentation applications that are designed to be compatible with Microsoft Office files.

One challenge is represented by Microsoft's Windows Vista operating system, which generally requires additional hardware to operate efficiently thereby increasing the cost of the configuration, said Kim. He added that Everex is working, too, to determine whether costs involving additional Microsoft software and processors made by Advanced Micro Devices and Intel can be lowered.

Everex isn't the only PC firm beating down retail prices of PCs. Acer this week is offering a full-featured Acer PC for $399. PC prices have been in a relentless drop in the last few years, dropping from $700 to $400 for low-priced models.