The cheap PC changes everything

by Alan Zisman (c) 1998. First published in Computer Player, February 1998

In predicting the trends for 1998, it?s easy for commentators to focus on the new and high end?the hardware and software coming up.

Sure, we?ll see plenty of that in 1998? at least, we?ll see lots of things that were already visible in 1997 become more noticeable in this new year.

For example, it doesn?t take much of a prophet to predict that we?ll see more products out on DVD, and more players to play them (but most people and most products will continue to use good old CD-ROM).

And we?ll see some Universal Serial Bus peripherals? modems, speakers, scanners, and more. But again, most people will keep up using old-style add-ons to their computers.

High-end CPUs will be faster and more powerful. Hard drives will be larger. Customers will want (and need) more and more RAM.

I even expect we?ll see Windows 96. I mean Windows 97. I mean Windows 98. And whether or not the US Justice Department manages to separate Internet Explorer from Windows 9x, it will be a useful upgrade. But as with the other useful enhancements, more people than not will resist the temptation to line up to be the first to upgrade.

In fact, the most noticeable and in many ways most significant trend won?t be on the high end, with the new and ever-more-powerful. Instead, for a change, it?s happening as we speak, at the low-end.

PC Magazine?s Bill Machrone once suggested that ?the computer you want always costs $5,000?. Machrone?s Law has remained true, over the past decade and more, even though the computer most of us have actually purchased has tended to cost between $2000-$3000. Over the years, there have been attempts at marketing a cheaper computer, but most of these efforts have been ignored by most consumers?for example, customers didn?t want to buy a $1200 486 a couple of years ago, opting in large numbers for a $2000 Pentium instead.

Suddenly, though, people have started buying cheap PCs? 40% of last Fall?s home computers cost less than $1000(US)? call it $1400 Canadian. At that price, buyers are able to get a name-brand MMX-powered Pentium 166 or 200, with 16 megs of RAM, a gig or so of hard-drive, a 33.6kb modem, and a 14? monitor.

Not my dream machine, but still, a $2,000+ computer of a year or so ago, and one that is plenty able to run the current generation of productivity and game software, and that should have a year or two of life before it starts to feel seriously outdated.

And that?s a name-brand machine?an Acer or an IBM or a Packard-Bell or an AST. A no-name clone, from one of the hundreds of little local stores will offer equivalent (or better) features, at several hundred dollars less. Before Christmas, one local vendor was advertising a clone with that feature-set for $900 (Cdn). Yes, including monitor.

A market buying cheap, reasonably capable PCs changes a lot of things. It had seemed like the home PC market was saturated?and that was true, at least for $2,500 PCs. A lot more people may be interested when the price drops below $1,000.

And the people who already have a computer are going to be more interested in a second (or third one). Let the kids have their own. One for home, another for the cottage.

It puts more pressure on schools to integrate PCs into the curriculum when they can buy three for what they?re used to paying for one.

Strategic News Services analyst Mark Anderson (quoted in PC Week) expects that Cheap PCs could in short-order, increase the number of PCs world-wide from today?s 300 million to 800 million.  With a potential market of that size, we could start seeing changes in product development, with new releases aiming at the many millions of existing users, rather than at the minority with new, high-end hardware.

Slowing down the frenetic change might not be such a bad thing, you know? more of us might actually learn how to use one generation of products before we feel pressured to upgrade to the next generation.

On the other hand, the emerging mass-market for Cheap PCs may put still more pressure on beleagured Apple. When PCs were $2,500 and Macs were $3,000, I might choose to pay a bit extra to get a Mac. But when PCs start at $900 will I pay $1,800 for a low-end Mac? And with Apple having killed off the Mac-clones, there will be fewer low-end Mac alternatives.

In fact, with all the talk about the presumed evils of the Windows-Intel monopoly, it all seems a bit ironic? monopolies are supposed to lead to artificially high prices for consumers. Instead, spurred by plummeting prices for RAM and hard drives, we?re just seeing the beginning of the Cheap PC. Will it lead to getting a computer as the prize in a Crackerjack box? Sign on with an Internet Service Provider, get a free PC?

Tune in to this space next year? we?ll see!