|Hard Drive to Increase Computer Sales; Prices Lowest in Memory|
|Subject||Calculation, Interpretation, and Estimation|
|Key Words||Sales, Prices, Production, Demand, Revenue|
Nearly half of U.S. households now own a PC, yet December 1998 turned out to be a strong sales period for computer retailers. Unit sales rose 41 percent. However, average prices fell by 20 percent to barely more than $1,000 as computer manufacturers increased their production of sub-$1,000 home-PC models to satisfy the demand of less affluent households.
The fortunes of different retailers varied. Best Buy and Circuit City saw double-digit gains in revenue, but CompUSA and Tandy, which did not focus on low-priced PCs, saw slower growth, even falling sales. In general, lower-priced computers have slender profit margins. This may cause consolidation among retailers and a reduction in the inventory carried. Meantime, Dell and Gateway continued to maintain high average selling prices of around $2,000 by serving repeat buyers. Dell also noted a growth in sales of digital cameras and scanners to transmit images over the Internet.
(Updated March 1, 1999)
|Source||Gary McWilliams, "Lower-priced PCs Drove Strong Sales For Holiday Month", The Wall Street Journal, January 8, 1999.|
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