PC Phenomenon

Plummeting Prices

Not long ago, PCs selling for less than $1,000 erupted onto the computer scene with much fanfare. A real bargain, the sub-$1,000 basic computer looks like it's here to stay.

And it may not be too long before PCs of this kind can be had for less than $500, according to Robert Enderle, PC analyst with Giga Information Group, an information technology advisory company in Santa Clara, California.

But purchasing a bargain PC means making a few compromises. To offer these bargain-priced machines, manufacturers are removing all the bells and whistles, leaving users with essentially stripped-down models. That means you're buying for the here and now--and probably won't be able to take advantage of future capabilities down the road. "[Sub-$1,000] PCs are good if you don't anticipate much change in your business," says Enderle. They may also work well as a secondary computer.

Typically, PCs with pricetags under $1,000 (excluding the monitor) come with either Intel's Pentium II or Celeron processor, or Advanced Micro Devices' K6, usually with a speed of 266 MHz. They don't boast the largest hard drives around, but they're not small either: 3GB hard drives are fairly standard. They usually come standard with 56K modems and 32-speed CD-ROM drives. Many PC vendors cut corners on components like keyboards and mice, so don't expect to get the latest and greatest features in these products.

When purchasing a bargain PC, Enderle advises buying from a company with a solid reputation. Ask other entrepreneurs whom they're buying from and why; when in doubt, stick with major brands. Leaders offering aggressively priced PCs at basic performance levels include Dell Computer, Gateway and Micron Electronics. However, most PC vendors, including Acer America, Compaq and Hewlett-Packard, also have computers in this category.

A bargain basement price shouldn't always be your number-one concern, however. "Don't get hung up on [buying PCs] for less than $1,000," Enderle advises. "You want to buy what's appropriate, and the lowest priced unit is seldom the machine that has all the features you need nor is it one that won't become obsolete.

"It's probably better for small businesses to buy in the $1,200 [range] because while you're still paying very little, you may get better value." The trick: Always try to get the best combination of price, performance and features for your money.

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This article was originally published in the January 1999 print edition of Entrepreneur with the headline: PC Phenomenon.

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