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Prices Plummeting

How low can laptop prices go? Lower than $500, say a number of PC vendors.

The cheapest notebooks could sink to the $400 range by the end of this year and may even drop as low as $300 by late 2006, according to various computer vendors, chip experts, and PC industry observers. In fact, as we went to press CompUSA was selling a Compaq laptop for $425 after $300 in various rebates.

"It used to be notebooks would sell for close to $600 only as a stunt," says Mark Margevicius, an analyst with Gartner Research. But now some laptops have sold for that price consistently, he says.

Due to increases in production, some expensive notebook components have dropped in price, explains Roger Kay, analyst with Endpoint Technologies Associates. That in turn drives system prices down.

For example, the cost of a flat-panel display, which accounts for over half the total cost of a notebook, has fallen by 70 percent over the last 12 months, according to market research company iSuppli. The cost of other expensive notebook components, such as hard drives and memory, has halved over the past 12 months, says iSuppli.

Cheaper components don't mean shoddy products, say vendors. Low-cost machines are put through the same quality-control checks as any other computer, they say.

"These entry-level models deliver a solid and basic computing experience," says Matt Jorgensen, a Dell product marketing manager.

But Dell and other vendors we spoke with admit that low-priced models often serve as bait. HP says that low-end notebooks are meant to lure prospective buyers in. "It gives sales staff an opportunity to get you in the door and then coax you to upgrade," says Denise Dibble, product marketing manager for HP's consumer notebooks division.

At a Glance
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