Sales of low cost personal computers increased dramatically over the Christmas period with preliminary indications suggesting that sub $1000 boxes accounted for over 40% of US consumer PC sales in December and nudged almost 60% in some stores, according to estimates from Dallas, Texas based analysts Channel Marketing Corp. Early estimates from market research firm Computer Intelligence would seem to confirm this trend with the company saying that the low cost boxes accounted for between 42% and 47% of PC sales in electronics, office, and computer outlets. Sales of sub $1000 systems hit a previous high of 38.7% in August according to the La Jolla, California based firm. Ironically, the boost in sales may not have raised stores’ revenues since profit margins on the cheaper machines are between 2% and 3% compared to between 8% and 10% on the higher-end models. Industry analysts do not yet have firm figures on the extent to which sales of the cut price boxes are hurting traditional PC sales, but lower-prices boxes are believed to appeal more to consumers who didn’t previously buy PCs. Meanwhile prices look to be dropping further as Intel Corp last week cut prices on the 233Mhz version of its Pentium II processor line, saying it had brought forward its roadmap from the second quarter of next year after consultations with manufacturers and retailers suggested that the 233Mhz chip was the new entry-level offering. Prices for the 233Mhz Pentium II were lowered 33%. The chip now costs $268 in volumes of one thousand or more.
