Mobile PCs poised for price drop

By Richard Morochove

First published October 8, 1998

If you've been following the plunging prices on desktop computers, you may wonder what magical high-tech helium is holding up the cost of portable PCs. As selling prices for popular desktops for the home plummet toward the $1,000 mark, the top-selling notebooks still cost $2,500 and more.

But there's good news coming if you've got your eye on a notebook. New microprocessors, combined with lower costs in other important components, will push notebook prices lower. This will shrink the premium you now pay for a portable computer, compared to a similarly equipped desktop machine.

Notebooks cost more than a desktop PC for more than one reason. The cost of special components such as an LCD (liquid crystal display) panel and battery make them more expensive to manufacture. There are fewer manufacturers of notebooks compared to desktops, which lessens price competition.

Furthermore, if you need heavy-duty number crunching capabilities, you'll find that notebooks are generally less powerful than desktops. Intel dominates the processor market for notebooks, just as it does in desktop PCs. However, the chip maker's mobile Pentium II line tops out at a clock speed of just 300 MHz., compared to 450 MHz. for the Pentium IIs used in desktops.

Yet things are changing for the better. Intel is planning to introduce an inexpensive version of the mobile Pentium II, a mobile Celeron chip complete with cache, early next year. Some of the smaller chip making competitors will beat Intel to the punch.

Last month AMD (Advanced Micro Devices) introduced a 300 MHz. K6 chip for notebooks. In quantity, the AMD chip sells for less than half the cost of Intel's 300 MHz. mobile Pentium II.

The Cyrix division of National Semiconductor expects that notebooks based on its 233 MHz. and 266 MHz. mobile MediaGX chips will be released before year-end. It's rumoured that Compaq will be among the manufacturers using the chips for low-priced notebooks aimed at the consumer market.

These bit players will force Intel to take a close look at pricing even before its mobile Celeron is ready. Look to see Intel cut chip prices around October 25, just in time for the holiday selling season.

The LCD panel is one of the most expensive notebook components but the days of extreme shortages in manufacturing capacity are far behind. The dramatic drop in demand from Asian markets will result in lower display costs for notebook makers.

The new chips and lower LCD prices should result in a dramatic drop in notebook selling prices. I expect to see brand name notebooks sell for as little as $1,500 by early next year.

If you're looking for a good price on a notebook and can't wait for the new chips, consider purchasing a discontinued or refurbished machine.

Notebook models change quicker than desktop PCs. You can save a considerable amount of money if you're willing to buy a machine a couple of steps behind the leading edge. Some manufacturers, such as IBM, discontinue models as little as four months after their introduction. Any notebooks remaining in stock are sold off at bargain basement prices, as little as half the original list price.

If you use a notebook for basic computer needs, such as word processing and checking e-mail, then a refurbished notebook could suit your needs. Typically these are models two or three years old coming off corporate lease plans. They are thoroughly checked out and repaired, if necessary, to ensure they're in working condition.

Refurbished models with a colour display sell for $700 or so while those with a monochrome screen are priced even lower, around $400. You should realize you're not getting state-of-the-art notebooks at those prices. These are 486-based models and typically come with a hard drive with 1 gigabyte or less storage capacity, and without a built-in CD ROM drive.

There's more good news if you're interested in one of the smaller handheld computers. 3Com's Palm units based on Motorola's Dragonball processor still dominate this market, accounting for more than 3 of every 4 units sold. A new, thinner Palm model is rumored to be on tap for early 1999.

Currently Intel has a minuscule share of the handheld chip market. Little over a year ago Craig Barrett, now Intel's president and CEO, dismissed the handheld market as too small to worry about. At one time Intel's former CEO, Andy Grove, ignored the threat of cheap desktop computing chips from Cyrix and AMD, which allowed the little guys to run away with the market.

So it comes as no surprise that today the giant chip maker is eyeing the growing handheld market closely, trying to avoid the same mistake. Intel recently acquired the plant that manufactures the StrongARM chip. Used in the late, lamented, Apple Newton, this low-power chip is perfectly designed for handheld computers. Can an Intel-designed handheld PC be far away?