HP has raised some PC prices and will slow planned price cuts to stem losses it says were the result of lowering its prices too quickly during its third quarter. Dell originally chose not to follow HP's aggressive prices, but in late August it enacted some small price cuts on PCs.
With component prices and demand firming, desktop prices from brand-name manufacturers are most likely to stay in place, analysts say. Desktops are likely to hover near the $400 mark. Notebooks can be found for as little as $700, but prices for well-outfitted machines are likely to be near $900, said Steve Baker, an analyst with NPD Group.
For $900, consumers should find an Intel Celeron or Advanced Micro Devices' Athlon XP-M processor, a 15-inch screen and a combination CD burner/DVD-ROM drive. Two years ago, consumers were lucky to get a 12-inch screen and a CD-ROM drive for $1,000.
DRAM doldrums?
Volatile memory prices may cause the most angst among PC manufacturers in the short term.
Low DRAM prices have caused memory to jump to 512MB in many PCs. But DRAM began increasing in price again recently, according to Gartner, which forecasts that the average price for a DRAM chip will increase to $5.55 during the third quarter, up from $4.61 during the second quarter. If DRAM hits $6 on average, it will start to pressure prices on memory modules and in turn on basic PCs, said Andrew Norwood, analyst with Gartner. Gartner's prices reflect the equivalent of a single 256-megabit DRAM chip before it is assembled into a memory modules for use in a PC.
PC makers are likely to adjust their configurations to compensate, HP's Anderson said.
"I wouldn't be at all surprised to see that change for the holidays. A (Windows) XP system with 256MB is good enough for most people," he said.
PC makers can also turn to slower processors or smaller hard drives to offset higher DRAM prices. But moving backward on processor speed or hard-drive sizes puts a PC's perceived value at risk.
