Razor Thin Computer Profits Could Trigger Minor Price Cuts

With OEMs making razor thin profits on computers, this holiday season may not see the dramatic price cuts that we have seen in previous years. Starting this holiday season, which traditionally sees price drops starting on Black Friday, consumers will start shopping for deals. What is going to be interesting is to see how many PC makers can reduce their pricing even lower to cash in on the buying season.

With the new netbooks priced on the low end of the spectrum, there may be very little shaving of prices. According to an article by Siliconvalley.com, it states that:

PC makers generally reap thin profit margins, so don’t expect prices to drop precipitously. In addition to whatever price cuts they do make, companies also are likely to offer more package deals that include free software or hardware add-ons to make more expensive machines look like a better deal. They may also rely on the age-old practice of luring shoppers with a low-end, cheaper configuration, but try hard to up-sell pricier, more powerful machines.

In addition the article states:

The netbooks trend could help PC makers keep unit volumes steady during the holiday shopping season, even if it means taking a hit on revenue and profit margins. It could also backfire by diminishing the appeal of regular laptops and desktops.

So if you are in the market to buy a new computer, especially a low end unit, you may not see huge price cuts this holiday. But netbooks could do well since they are good replacements for some who need an Internet – email machine and are pinching pennies on their purchase.

What do you think?

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I have been writing for LockerGnome since relocating to Missouri seven years ago, where I continue to be a technology enthusiast who enjoys playing with the newest and latest gadgets.