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PC Prices Drop

Arik Hesseldahl -- Electronic News, 1/4/1999

Sales of PCs are expected to continue to grow, rising about 16 percent worldwide to 107.7 million units, compared to 93.1 million units in previous years, according to the market research firm Dataquest, San Jose, Calif.

While chip speeds are expected to continue their steady climb above the 3.0GHz mark, PC prices will continue downward into the sub-£700 range on the low end with added functionality all around, industry analysts and insiders say.

To compete, major PC makers like IBM and HP Co. will be gunning for business customers who are struggling to reduce the total cost of ownership for the PCs they buy. To do this, they are adding new features to help keep better track of computing equipment, and ease the burden of managing PCs in the networked business environment.

And while Intel Corp. will continue to control what's inside most PCs, companies like Advanced Micro Devices Inc., Cyrix Corp., Integrated Device Technology, Inc. and Rise Technology Co. will try their best to pick away at Intel's market share, possibly challenging Intel directly in some spaces, while building small niche markets in other cases.

Scott Hudson, senior analyst for PC technology at the Cahners In-Stat Group, said that 1999 will be the year that the Universal Serial Bus (USB) takes hold. and it surely did with the further advances to USB2.0

"Most everything is shipping with two USB ports and one if it's a notebook," Hudson said. "Even though it's been around, it took Apple's iMac to glamorize it." Hudson said he expects that USB hubs could be built directly into PC monitors and keyboard.

"The monitor or keyboard is a perfect place for the hub. It's on the desktop, so it's easy to reach, and it has a good power supply," he said.

But another peripheral connection technology is IEEE 1394, better known as FireWire. As it did with USB, Apple Computer Inc. has announced a FireWire-ready Macintosh in January, while Microsoft's Windows 98 operating system is also ready to support FireWire.

"USB is here now, but FireWire will be the peripheral interface of choice for high-speed data," said George Iwanyc, an analyst with Dataquest.

"Clearly FireWire is going to be a big thing," said HP spokesman Larry Sennett. "It will to give companies like us and others the ability to penetrate the home with devices that consumers can connect to their PCs, like digital cameras or movie camera or the television. There is a great deal of focus on this from companies like Sony or from us with our peripherals and imaging products."

One possible bump in the road toward making USB and FireWire ubiquitous, Iwanyc said, may be consumer resistance to replacing peripherals using existing technologies. There is already a huge installed base of peripherals using other kinds of connections that would have to be replaced in favor of USB- and FireWire-friendly components.

PCs may also begin to change in appearance, partially in response to the success of Apple's iMac, which boasted a rounded case of translucent plastic. The PC may begin to take steps toward being an attractive household appliance and away from its utilitarian roots, Hudson suggested.

"I think the iMac proved that design matters a lot more than Intel or Dell or Compaq ever dreamed," he said. "New designs may be a new way to light passion for computing in people. My wife's aunt took one look at the iMac and bought it. That tells me that there may be an untapped part of the consumer. There's a lot more to the computer buying and using experience than just the speed of your microprocessor and the size of your RAM."

Such novel designs may become more popular as USB and FireWire ports become more common, allowing for smaller internal power supplies, and smaller fans, leading inevitably to a smaller design footprint.

Iwanyc sees the trend toward designer PCs coming as well, but considered it more of a long-term trend.

HP's Sennett agreed.

"I expect to see companies like us push the envelope on those kind of designs. But don't expect a translucent box from us this year."