Today's hardware: so much for so little.

It's been more than 15 years since the IBM PC was introduced and changed the world. "Giga" and "mega" have become commonplace words. The Internet and its handmaiden, the World Wide Web, have become communication channels that are beginning to rival (perhaps even replace) the telephone, and both print and broadcast media. E-mail has already succeeded in usurping a large part of the business of something we now call "snail mail" (computerese for the U.S. Postal Service).

For all of the amazing changes computers have brought us, nothing about this new world of information technology has been more astounding or more sure than its constantly dropping cost.

I bought my first computer in 1983. It came with a nine-inch monitor that glowed green letters at me, ran at a speed of 8 MHz and was one of the first to have a hard drive - all ten megabytes of it. Somewhere, I still have this marvel packed away in its original boxes simply because I have been unable to throw away something that cost me $5,999 and still works.

August is traditionally the month when computer prices drop and their power goes up, because the big industry show is held in August and manufacturers introduce new models and cut prices on the old ones. This August was no different. Fully equipped (sans monitor) 233 MHz machines dropped to a then-record-low of $699, and 400 MHz computers fell to $1,799.

That was two months ago. With just a modicum of shopping, for $600 I now can buy a computer that runs more than 25 times faster and has 200 times the storage of my 1983 state-of-the-art wonder. Today, for another $200 to $300 I can buy a monitor that displays in full color everything from videos to newsletters. By the time you read this, the $400 computer may be commonplace.

The first sub-$400 machine was on the streets in early October: the Gazelle, offered by PrecisionTec of Costa Mesa, CA. For $400 you get a machine billed as a "home" computer equipped with a 233 MHz processor, 16 megs of RAM, a 1.7 gigabyte hard drive, 24x CD ROM, a 3.5-inch floppy drive, a super-VGA graphic card with 2 megabytes of memory, a 16-bit stereo sound card, 60-watt speakers, a 56K internal fax modem, a two-button mouse, a 104-key keyboard and a Windows 95 operating system. If you're like me, the "business" computer that sits on your desk doesn't come close to matching that $400 "home" machine, and my current desktop Pentium 90 cost a total of $3,200 in late 1994.

Today's bargain computers far outstrip top-of-the-line machines from a year or two ago, and for nearly every use they have more than enough power, speed and communications ability. Computer prices have averaged a double-digit rate of decline since 1990. They dropped by 12.7% in 1995, 22.3% in 1996 and 21.4% in 1997.So, what's a nursing home executive to do when it comes to buying computers? If the prices are always dropping, when (if ever) do you buy? The answer is always, buy today but buy the lowest-cost machines that will do the job you need done this year, next and maybe the one after that. Don't be like me with my $5,999 paperweight. Get rid of machines that, while they still "work," are incapable of running today's software. Maybe the best thing to do is not buy at all, but lease for two years, and at the end of each lease upgrade to greater functionality. Computers should be thought of as a consumable asset with a limited life, much like vehicles. This is a great time to get new computers. Just ask Beverly Enterprises. In early October the country's largest nursing home and long-term care company acquired 10,500 OptiPlex GX1 personal computers from Dell Computer. Beverly's stated goal in this mammoth expenditure was "to implement (at its more than 600 locations) a new clinical software application designed for the nursing home market to automate critical processes and significantly reduce administration costs." Dell, in its announcement of the deal, went on to state, "Integrating its (Beverly's) clinical, financial, dietary and therapeutic systems will make it easier to determine exact service provided for reimbursement. Optimizing the new software system required replacing existing desktop systems with new." It's a good bet that this sort of reasoning isn't unique to Beverly Enterprises.

Meanwhile, would-be customers are seeing increased competition on price and performance. PC manufacturers are caught in an escalating price war. For instance, CompUSA, the nation's largest computer retailer, announced on October 6 that its same-store sales at 134 stores fell 1.7% in its most recent fiscal quarter, as average computer prices continued to fall and corporate sales weakened. As computers become more and more commoditized, manufacturers are losing the ability to sell brand value. Price and performance are becoming the only decision points.

Thus, while $400 computers are one way competition is tightening, at the other end of the marketing continuum is increased performance. Flat panel screens are arriving at lower prices. Laptops are boasting 14.1-inch screens that have more useable display area than many 15-inch monitors. And good speech-recognition is a technology of the near future (12 to 24 months).

It is not just desktop and laptop computers, though, that are experiencing significant drops in price. On October 12, Compaq announced a price cut of up to 14% on its entire C-Series handheld products. That brings the cost for the 2010C and the 201SC handhelds down to an estimated street price of $699. Handheld PCs are increasingly finding their way into the healthcare industry. At the Windows on Healthcare IV conference held this past October in Orlando, Florida, John D. Carpenter, Jr., Microsoft's worldwide healthcare industry manager, said, "Windows CE-based healthcare applications let medical providers access patient care information anytime, anywhere, which increases productivity, reduces costs and enhances the quality of care." In healthcare, as in other businesses, software is what drives the need to upgrade computers. Today's applications require computers designed to run them. For the long-term care industry, the bad news is that those computers are not the ones we bought (or thought about buying) five years ago. The good news is that the new computers never cost less.

David Patterson is a contributing editor to Nursing Homes/Long Term Care Management.