Rise of The Sub-$500 Notebook?

Friday Jul 22nd 2005 by David Needle
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That's a mighty attractive price — should small business buy in?

Dell just hit one of marketing's magic price points with the release of a notebook computer for $499.

The price — after a $150 mail-in rebate — may only be a summer special, but it's a clear indication the under $500 notebook will some day be standard for consumers if not business customers.

Dell isn't the first big-name computer vendor to crack the sub-$500 barrier with a low-end notebook. Retailers such as CompUSA and Best Buy have offered similar deals (after rebates) for notebooks from HP and others.

With Dell joining the party, $499 is shaping up as a new entry point for notebooks, which is an impressive development when considering it was only about 18 months ago that $799 was the low-price benchmark.

But serious business customers will likely have to wait a few more years for $500 notebooks with the specs they need.

"The business user is still going to be in that $999 and up category because they really want the lighter units, with the bigger displays and, most importantly, more memory," said Tim Bajarin, president of consultancy Creative Strategies.

By contrast, the Dell Inspiron for $499 (a discount off the normal $649 price) has a relatively small 30GB hard drive, 256MB shared DDR SDRAM and a 14.1 inch display. The processor is an Intel Celeron 350 running at 1.30 GHz.

Price also isn't necessarily on the top of IT buyers' concerns when it comes to notebooks. Tim Scannell, president of Shoreline Research, says enterprise buyers want the best price, but that security, service and support, among other features, are a bigger determinant than price.

"Control of systems is a major concern in IT departments," said Scannell. "Companies are concerned about unauthorized wireless access and the introduction of viruses, whether planned or accidental, and they will control those purchases. You won't see them authorizing purchases of consumer notebooks just to save a few bucks."

There are many reasons for the price drop, including traditional summertime deals by all vendors to boost sales, manufacturing efficiencies and a good supply of once scarce LCD displays.

But the overriding reason is good old demand. Notebook sales eclipsed desktops in the U.S. at the end of last year and it doesn't look like there's any turning back.

"When you think about computing these days even in a home, you don't think about sitting in front of a terminal, or specific rooms in a house," said Bajarin. "Now with wireless, people take their notebooks where they want to, whether it's to the backyard or out to Starbucks. And there's been a huge proliferation of notebooks in schools."

Just this month, a public school in Vail, Arizona, announced it would be the first in the state to give its students notebook computers instead of textbooks for the coming school year.

Sub-$500 notebooks have come a long way from what many consider to have been the first relatively full-featured notebook system, the Gavilan.

Introduced in 1984, the Gavilan was priced at $3,999, had 64K of main memory, a tiny display, and 3.5 inch floppy disk drive for storage.

Adapted from Internetnews.com.

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