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Sub-$500 PC mostly a thing of the past

It still is possible to get a computer and monitor for $500, but the lowest end of the PC price spectrum seems to be drying up.

EMachines (www.e4me.com), generally credited with starting the move to bargain PCs in 1998 with a $500 system, rose to become the No. 3 PC manufacturer but has seen its fortunes dive.

Nasdaq delisted its stock in the spring, though the company recently said it expects to break even by the end of next year. To help assure customers, it also started to offer one-year warranties on its PCs.

Dell Computer, which has been leading the price war this year, also introduced a $599 PC, including monitor, to attract price-sensitive customers. The SmartStep price matches a low-price offering from Hewlett-Packard, and is less than Gateway's $599 machine that has no monitor.

Price remains a key factor in the purchasing decision, according to Stephen Baker, an analyst with marketing research company NPD Intelect.

"We're seeing that people who are buying computers are depending a little more on pricing than they were in the past," said Baker, adding that eMachine's top-selling PC costs $399 (after a $75 mail-in rebate), while the industry average is $800. "EMachines does seem to be having a comeback. They're definitely a little more of a player now, probably because component pricing has come down so much that products at the low end don't suffer with having stuff taken out of them to reach the low price point."

Offers of "free PCs" in return for signing long-term contracts for Internet access have virtually disappeared as companies discovered they couldn't make money on the deals and many customers discovered they didn't want to get locked in to such a commitment.

"We've moved back to PCs that are really good deals, cheap by historic standards, but closer to $1,000," said Harry McCracken, executive editor of PC World magazine.

EMachines ran into stiff competition from major manufacturers that rushed out their own low-end PCs, and this year the entire industry has been engaged in a price war that has driven down the cost of even the most powerful computers.

A few years ago, $2,000 was the generally recognized price for a full-featured home PC. Now that number is down to about $1,500, with plenty of good choices available for less.

"A lot of people focus on the bottom line," said Alan Stafford, senior editor at PC World. "They aim for $600 and don't get something they're happy with instead of spending $200 more and getting something they'd be happier with a long time."

_ Information from Times wires was used in this report.

Technical jargon cheat sheet

CPU: Central processing unit. The computer's main processing chip. Its speed is measured in megahertz (MHz) or gigahertz (GHz).

Hard drive: Or hard disk. The "filing cabinet" where the computer stores software and data. Storage capacity is measured in gigabytes (GB).

RAM: Random access memory. Where your computer keeps the programs and files that are in use. Measured in megabytes (MB).

Video adapter: Or video or graphics card. Controls the video display on your monitor. Has its own RAM.

CD-ROM: Compact disc, read-only memory. Plays audio or computer CDs. Measured by "spin rate" times a base speed (typically 17X to 44X).

CD-RW: Compact disc-rewriteable. It plays CD-ROMs, but also allows users to make compact discs for everything from data backup to music to photos. CD-R discs can be recorded on once, while CD-RW discs can be re-recorded on up to 1,000 times. But CD-RW discs are good mainly for computer use, not recording music to use in other CD devices.

DVD-ROM: Digital versatile disk, read-only memory. DVDs contain more data than CD-ROMs and usually are used for high-quality video. DVD drives also can handle CD-ROMs.

Modem: Connects a computer to the Internet or another computer through a phone connection. Connection speed is measured in kilobits per second (Kbps).

Ethernet card: Or Network Interface Card (NIC). A device that allows a computer to link to a network. It's necessary if people want to use a high-speed connection to the Internet, such as a cable modem or digital subscriber line. Connection speed is measured in megabits per second (Mbps).

_ For a complete lesson in computer terms, see the glossary on page 18E.

Up next:Tough sell

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