CI Confirms Sales Of Sub-$1,000 PCs Exploded In August.

LA JOLLA, Calif.--(BUSINESS WIRE)--Oct. 8, 1997--

Low-Priced PCs Accounted for Nearly Two-in-Five Retail Desktop

Units Sold -- But Did Not Attract New Buyers

Sub-$1,000 PCs captured nearly 40 percent of U.S. retail desktop unit sales in August, according to just-released figures from Computer Intelligence (CI), the leading source of fact-based information for the computer and communications industries. The results came from CI's StoreBoard Channel Tracking service; a separate study from CI also sheds light on who is buying these low-priced PCs.

Until this year, sub-$1,000 PCs had generally been refurbished units or third-tier brands, but aggressively priced new models brought out early in 1997 by Compaq, Packard Bell and others brought mainstream new PCs down to this price point. From their very introduction, these PCs captured more than 20 percent of retail desktop unit sales. More recently introduced models from Compaq and Packard Bell have further accelerated the growth of the under-$1,000 segment, leading the low cost systems to a 39 percent share of all desktops sold in U.S. retail channels in August.

Price Distribution of Desktop PC Units Sold, U.S. Retail Channels

                       May-97    Jun-97    Jul-97    Aug-97
Under $1,000            23%        21%       23%      39%
$1,000 to 1,499         35%        39%       48%      33%
$1,500 to 1,999         32%        32%       21%      20%
$2,000+                 10%         8%        8%       9%

(Totals may not add to 100% due to rounding)

Source: Computer Intelligence, 1997

CI's research also shows that the best selling models in August were systems that were relatively new to the market. Of the five best-selling desktop PCs in August, three were sub-$1,000 models from Compaq and Packard Bell that were introduced into retail channels in July or August. In addition, all of the top ten models in August had been introduced since April, with seven of the ten introduced in July or August.

"The latest results show the importance of having fresh products in retail channels," said CI Industry Analyst Matt Sargent. "To keep pace, companies must refresh their retail product nearly continuously --which puts pressure on product development, as well as on inventory and channel management activities."

A key issue for PC manufacturers is whether the new sub-$1,000 PCs have attracted first-time buyers or lower income households. Are the new price points broadening the base of consumers using PCs by attracting new classes of users, or are existing users purchasing the sub-$1,000 PCs? Data from CI's quarterly Trendata Study suggests that the new price points are not in fact broadening the market.

First-quarter and second-quarter results from CI's Trendata Study have shown that the distribution of household income of sub-$1,000 PC buyers is no different from the overall buyer profile. Nor are the sub-$1,000 PCs attracting first-time buyers - in fact, there are proportionally fewer first-time buyers of sub-$1,000 PCs than of PCs overall.

"The Trendata results make it clear that, so far at least, the sub-$1,000 PC is not the consumer market panacea that some had hoped," stated Sargent. "While these PCs are certainly accelerating growth in the consumer PC market, they are not attracting large numbers of either first-time buyers or lower income households. This revelation has important marketing implications for manufacturers of the sub-$1,000 PCs. It also tells us that an $850 or $950 price alone is unlikely to radically increase the penetration of PCs into U.S. households."

Computer Intelligence, a division of Ziff-Davis Inc., is the leading source of fact-based information for the computer and communications industries. CI's extensive research capabilities provide a wide variety of products and services that help computer and communications companies sell and market more effectively. All of the company's products and services are based on proprietary information databases built and maintained by CI specialists.

Headquartered in La Jolla, Computer Intelligence has U.S. offices in Cambridge, Mass., Farmington and Norwalk, Conn.; Sunnyvale, Calif.; and Dallas, Texas. CI's European headquarters are in Paris, with sales offices in the United Kingdom, Germany and Spain, and sales agents in Belgium and Switzerland. Samples of CI's extensive market data and research results, timely commentary from industry authorities and previews of upcoming technology events are available on the company's World Wide Web site, http://www.ci.zd.com . Ziff-Davis, a Softbank company, is the leading provider of content about the Internet and computing. The quality and quantity of this content attract the largest and most powerful audience of early adopters and opinion leaders in both the business and consumer markets. Ziff-Davis enables advertisers to reach this audience effectively and efficiently through an integrated system of media.

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