Hewlett-Packard is breaking the $800 dollar barrier for a full-function, Intel-based multimedia PC - and setting the stage for what some analysts believe will be another year of harsh price cutting in the PC industry.
HPs new Pavilion 3260 sports a 200 MHz Pentium MMX processor, 32 MB of RAM and a 2.1 GB hard drive, and is expected to sell for $799 - a new price point for a system from a major vendor and with an Intel processor. The price does not inlcude a monitor.
James Staten, an analyst with market researcher Dataquest said other major vendors in the consumer space, such as Compaq, Packard Bell and IBM will be forced to follow HPs lead.
Staten said the new price point is attainable now partly because some PC parts have become cheaper - and because the 200 MHz Pentium MMX is due for a price cut.
But, he warns, not all vendors will be able to follow suit. "The main victims will be mid-tier players, who are not big enough to get the same efficiencies, but too big too live from smaller margins". James Staten predicted that AST, Apple and perhaps Gateway 2000 might take a hit.
James Staten also believes that corporate markets will be increasingly affected by the price war in the consumer arena. "We are seeing a lot of acceptance for sub-$1000 PCs in small companies", Staten observed, though he added that probably 10 percent or less of corporate PC sales are currently in the sub-$1000 range.
The newly announced HP Pavillion line of PCs also includes a 233 MHz Pentium MMX system with an estimated street price of $1099; a 266 MHz Pentium II machine for $1.699; and a 300 MHz Pentium II system with DVD drive that will resell for $1,999.
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