When Jim Wahl bought his first computer back in 1995, it cost $2,500. In December, when the Dallas acquisitions manager bought a Hewlett-Packard laptop for his daughter, he paid just $600. “[In the past], it was a lot bigger decision,” Wahl says. “But now, the tires on my car cost more than my laptop.”
Personal computer prices tend to fall over time, of course. But in the past few months, computer prices have plummeted much more sharply than the usual 5 percent yearly declines. In the fourth quarter of 2008 alone, the average personal computer’s selling price dropped 14.3 percent, according to consultancy IDC. Only once in the past 15 years have PC prices declined at a faster rate — in the fourth quarter of 2001, as the Internet bubble burst, when they dipped 14.5 percent, according to IDC.
And the recent slide may be a precursor to sharper declines ahead. As consumers cut back amid the global economic downturn and the popularity of low-cost computers known as netbooks rises, the computer industry could see a big drop in prices. “We are not done yet,” says Rob Enderle, president of consultant Enderle Group. “The drop is going to continue through the year.” Matthew Wilkins, an analyst with researcher iSuppli, predicts that average laptop prices could fall a further 10 percent in 2009, while desktop prices drop 15 percent.
Netbooks Cost as Little as $250
The accelerating price declines could change the dynamics of the tech industry. For consumers and corporate customers, the trend is overwhelmingly favorable. They get more computing capability than ever before, often for less than $1,000 and, in the case of netbooks, for as little as $250.
But for tech companies, the squeeze is painful. Computer makers such as Dell and Lenovo are struggling as customers hunt hard for bargains. Manufacturers of…