Wanted: Cool-Looking, Cheap PCs

SAN FRANCISCO (06/08/2000) - Today's consumers want it all: a sleek, well-designed PC with interesting colors and maybe even a flat-panel display.

And they'd like to get all that for about what they pay for today's average beige box system.

International Data Corp. conducted consumer focus groups to uncover this information, and Research Manager Roger Kay discussed the consumer PC market during a teleconference on Thursday.

With price and performance becoming standardized across brands, creating a good-looking system that appeals to consumers is one way for vendors to distinguish themselves, Kay says. But people won't buy if vendors jack up the price.

"End users aren't willing to pay much for design," he says. "They like design, they expect design, but they're not willing to pay much for it."

The same goes for flat-panel displays. "End users are extremely interested in flat panels," he says. "They love flat panels, they are excited by flat panels, but they have a very unrealistic view of what they have to pay for them."

Consumers say they're willing to pay 20 percent to 30 percent more for a flat-panel display instead of a traditional desktop monitor, he says.

Unfortunately, flat-panel displays cost significantly more than that right now.

The cheapest are still close to $2000, and pricing won't come down much in the near term.

Size Matters

People also are showing a greater preference for smaller desktop systems, Kay says. A smaller footprint "is easier to work with and it's neater," he says.

People are getting comfortable with the idea of buying a smaller system with limited expandability and then "upgrading" later by buying an entirely new system, he says.

To reach these smaller form factors, PC vendors must consider removing more of the legacy parts from today's PCs. Over the next few years, a growing number of systems will ship without once-standard parts such as ISA slots, serial ports, and parallel ports.

Vendors such as Compaq Computer Corp. and Hewlett-Packard Co. have started down that road with legacy-free and legacy-light systems, Kay says. Expect more to appear in the near future.

Consumer PC Growth

PC vendors that distinguish themselves with great system designs could reap massive rewards, as IDC expects consumer PC sales to continue to expand for the next few years. This is true despite the impending emergence of low-cost Internet-access devices.

"[The PC] is still the best way to get onto the Internet," Kay says. And if you want more functionality, such as word processing or personal finance programs, a PC is really the only product that can do it all.

IDC expects PCs to continue penetrating homes at a greater rate. Today, about 50 percent of homes have PCs; analysts expect that figure will hit 75 percent in the next two to three years. Home PC shipments will eventually outpace commercial desktops, Kay says. In 1999 home PCs accounted for 44.6 percent of total shipments in the United States, with the rest going to commercial sales.

By 2004 the home share will climb as high as 55 percent.

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