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No $500 PC This Year

Daniel Knight - 1998.04.27

1998 – Homer Brickley on Nando.net thinks we’ll see $500 computers by Christmas ( The Computer Model T Is Not That Far Away). I beg to differ.

I’m an old timer in this industry. I used my first PC (back when that meant “personal computer”) in 1979. Back then, we had some truly inexpensive computers.

Commodore VIC-20Remember the Commodore VIC-20, “The Wonder Computer For the 80s?” William Shatner pushed it, and dealers moved a lot at $299 or less. Color, sound, and a reasonable 5 KB of memory made it a winner. You could hook it to your TV and use a $100 tape drive for storing programs.

It was an incredible breakthrough.

In the States, Timex sold the Sinclair computer for as little as $99. This one didn’t have color, but it didn’t require a special tape recorder, either. It sold fairly well.

Then Commodore blew our minds: The C-64 sold for $595 with an incredible 64 KB RAM, 40-column text, and compatibility with all our old VIC-20 accessories. You could buy a real computer system with a 170 KB floppy drive for under $900 – and the price dropped constantly.

Mac ClassicAbout four years ago, just before CD-ROM became essential, Compaq was selling $999 computers. Apple sold the base Mac Classic (floppy only) for that price. We’ve had sub-$1,000 computers before, but buyers always wanted more.

This Is 1998

Today’s users aren’t content with 64 KB or 1 MB of RAM or with a floppy-only computer. We insist on at least 16 MB RAM, multi-gigabyte hard drives, fast CD-ROM players (and sometimes DVD), a couple megabytes of VRAM with accelerated video, stereo sound, a fast modem, and a 200 MHz processor – and we consider that an entry level system.

Sorry, Mr. Brickley, but we don’t want Model T computers, even though entry level computers may seem like that compared with the latest Power Mac G3 or Pentium II machine.

To sell a computer for $500, it has to cost under $300 to produce. Figure the cost of a hard drive, a fast CD-ROM player, and a motherboard with RAM and integrated video. Add a case, a keyboard, a sound system, a modem, and a power supply, plus licensing for the operating system and the cost of some bundled software.

The industry will comfortably break the $1,000 with viable new systems by Christmas, but with all the features buyers demand, the only $500 computers we’ll see this Christmas are from liquidators unloading old inventory.

Further Reading

Short link: http://goo.gl/VF5Mux