- If you waited for post-holiday PC prices to drop before buying a new computer, you're out of luck. Prices are holding firm and in some cases have snapped back to pre-holiday highs as venders rescind incentives.
Hewlett-Packard just after Christmas discontinued a total of $US500 in coupon offers for buyers of qualifying HP products. Gone also is IBM's holiday spirit. Immediately after Christmas, Big Blue nixed specials that ranged from $US400 to $US100 off select notebooks. Dell, Sony and Compaq have stopped offering free shipping for desktop PCs. Prices at Gateway and discount PC vendor EMachines haven't budged a penny since the holidays, according to their websites.
The vendors' stubborn stance on PC prices is in stark contrast to last year's post-holiday sales. That's when major manufacturers were surprised by weak PC sales and cut computer prices sharply to get rid of their hardware overstock.
This year, computer makers were conservative when gauging holiday PC sales, says Stephen Baker, an analyst with NPD Intelect. PC manufacturers anticipated the 2001 holidays would be among their worst sales years and planned accordingly.
NPD Intelect forecast weak PC sales this holiday season, but says it's still too early to comment on holiday sales receipts.
"This year, manufacturers saw the [year-end] slump coming," says Toni Duboise, desktop PC analyst with the research firm ARS. Anticipating weak sales, some PC makers prepared for the worst and built fewer models for holiday buyers, Duboise says. Compaq and Sony have cut the number of models available nearly in half compared to this time last year, she points out.
Efforts to keep PC inventory close to the bone may have paid off for IBM and Gateway, which have both discontinued several desktop models available before the holidays.
PC market matures
A maturing PC market is to blame for the lack of post-holiday sales, say some industry watchers.
New computer sales are no longer driven by first-time PC buyers, Duboise says. PC manufacturers realized that the hard way in 2000, when many were blindsided by weaker than expected PC sales. As a result, they got stuck with too many unsold systems.
But that was good news for consumers, who benefited when the PC manufacturers cut prices to get rid of overstock in the following month, January.
Another recent trend is that PC buyers are shopping carefully, looking for particular technologies and upgrade components that enable them to lengthen the lifetime of an existing system.
Tardy buyers pay piper
The best deals were about three weeks ago. For example, that's when Dell offered free shipping with PCs ordered for the holidays, and threw in a free DVD (digital versatile disc) or CD-R (CD-recordable) drive, or a Lexmark multi-purpose printer/scanner/copier. IBM shaved $US400 off select model ThinkPad notebooks purchased before December 22. Sony offered similar notebook savings.
Without surplus PCs lying around, post-holiday PC prices could in fact rise, according to NPD Intelect analysts. Higher prices are likelier, because PC sales in general are beginning to show signs of strengthening, according to trends in NPD Intelect's research.
"We are seeing early indications that the PC component market is starting to firm up," Baker says. That means higher prices on things like memory and optical drives. As a result, consumers may soon pay the current rates but get a desktop PC with less memory, a smaller hard drive, and only one optical drive.
Still, the overall trend for PC prices is always downward, as new technologies supplant the old. Despite flat PC prices, analysts agree prices will dip. The question is when.