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PCs breaking price barrier
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November 21, 1997: 10:46 a.m. ET
Some are selling for less than $1,000 -- but watch out for hidden costs
From Correspondent Steve Young
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NEW YORK (CNNfn) - If you're in the market for a new computer, now is the time to find one at a reasonable price. Computers selling for less than $1,000 are drawing hordes of buyers.
But not everything that looks like a bargain is a bargain.
If it looks too good to be true, it might be. Industry powerhouses IBM, Hewlett Packard and Packard Bell offer PCs at under $1,000, but there's a catch that's easy to miss in the advertising blitz.
The monitor isn't always included. Add that in, and suddenly the price tag for a PC is often $1,250 or more, surprising some customers lured by the price promises.
"The reality of what's happening in the marketplace is that this [$1,000] is a magic price," says David Elrich, co-founder of the Internet computer guide E-Town. "[It] is the magic price point because it opens [the computer industry] up to this entire new segment of consumers."
Today's low-cost PCs come with built-in modems and relatively fast microprocessors. That's all the hardware needed for the basic applications used in home computing, including word processing, personal finance and e-mail.
Compaq, the nation's biggest PC maker, has been particularly aggressive at the low end, and is by far the biggest player in that market.
"Overall sales [in the sub-$1,000 category] are growing, except for a certain share," says Echard Pfeiffer, president and CEO of Compaq. ". . . That, I think, is great because it opens up the market to new potential users. It really tests price elasticity, and Compaq is very fortunate in being the leader in that field."
In addition to Compaq, smaller PC makers like Monorail also sell complete systems for less than $1,000. Several companies, such as Maxim Computers and Tiger Direct, offer PCs for even less.
Still, industry watchers usually advise sticking with well-known brands that often can provide better customer service. In a sector where the big companies tend to get bigger while smaller ones can disappear overnight, it's important not to get stranded by buying into a company that might not stick around to support its products.
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