How Low Can PC Prices Go?

As consumers cut back and the popularity of low-cost netbooks grows, the computer industry could see a sharp drop in prices

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By Olga Kharif

March 11, 2009 at 2:21 AM UTC

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When Jim Wahl bought his first computer back in 1995, it cost $2,500. In December, when the Dallas acquisitions manager bought a Hewlett-Packard (HPQ) laptop for his daughter, he paid just $600. "[In the past], it was a lot bigger decision," Wahl says. "But now, the tires on my car cost more than my laptop."

Personal computer prices tend to fall over time, of course. But in the past few months, computer prices have plummeted much more sharply than the usual 5% yearly declines. In the fourth quarter of 2008 alone, the average personal computer's selling price dropped 14.3%, according to consultancy IDC. Only once in the past 15 years have PC prices declined at a faster rate—in the fourth quarter of 2001, as the Internet bubble burst, when they dipped 14.5%, according to IDC.