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Will PC prices plummet further?

June 9, 1998
Web posted at: 3:20 PM EDT

by Terho Uimonen

TAIPEI, TAIWAN (IDG) -- Already at historic lows, PC prices are set to hit even lower price points over the coming year as microprocessor advances promise to bring more performance to low-cost PCs, officials at chip vendors predicted here at last week's Computex '98 trade show.

As microprocessor vendors such as National Semiconductor's Cyrix unit and Integrated Device Technology's Centaur Technology continue to integrate more functions onto their chips, users can look forward to sub-$500 PCs before the end of the year, and lower still by next year, company officials said.

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Eventually, this relentless drive towards lower PC price points will lead to PC-compatible "information appliances" replacing traditional PCs, predicted Brian Halla, president and chief executive officer of National Semiconductor. "The new PC is the PC that will enable the information age," he said.

But such low-cost information appliances will still have to be compatible with Microsoft's Windows operating systems because of the popularity of the platform's applications among users, said Halla.

To put more reality into his vision of huge volumes of cheap information appliances replacing PCs as we know them, Halla outlined rollout and technical plans for future National Semiconductor/Cyrix processors that by mid-1999 will result in a sub-$100 PC-on-a-chip, known internally as the Media PC.

Traditional PC prices, meanwhile, will also reach new lows later this year. By Christmas, for example, several of IDT's PC maker customers will bring out full-fledged PCs with most of the latest PC technologies, such as MMX, Accelerated Graphics Port 3D graphics and a 100-MHz system bus at a retail price of $500--often including a 15-inch monitor, said Joe Baranowski, vice president of sales and marketing at IDT's Centaur Technology subsidiary.

"These [$500 PCs] won't be from first-tier vendors, but there will be quite a few of them in the second and third tiers," he added.

And by some time next year, $399 price points may become a reality. That will mean that the processor cost must reach new lows of somewhere around $40, Baranowski predicted.

To facilitate such price points, IDT is already working on a new generation of more-integrated processors that will include more functions on the same piece of silicon as the processor core, he added.