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Notebooks vs. desktops: same configuration, much different price

July 24, 1998
Web posted at: 3:00 PM EDT

by Ephraim Schwartz

(IDG) -- The price difference between a notebook and desktop with the same processor, hard drive, memory, screen size, and modem is in many cases more than double.

In some cases, three desktops, all with Intel Pentium II processors, can be had for the price of one notebook with the same processor.

For example, an IBM ThinkPad 770 with a Pentium II chip can be priced as high as $5,300 while the same system in a desktop is $1,700. Price comparisons of configurations from Compaq, Dell, HP and Toshiba are similar.

In part, at least, the cost of mobile technology is the culprit. For example, the mobile version of an Intel Pentium II processor with a 266-Mhz clock speed and 512KB cache costs a manufacturer approximately $444 while the desktop version of the same chip is $198.

But the single biggest factor in higher notebook prices are LCD screens, according to Phil Hester, chief technology officer for IBM's Personal Systems Division in Austin, Texas.

However, with the cost of the pricey flat panel TFT screens now at $1,000, if a 2.5-inch-thick flat panel was substituted for a 15-inch-thick CRT on something like the Dell Optiplex GX/266 desktop, the desktop price would still be $1,700 less than Dell's Latitude Cpi notebook with the same configuration.

Hester also sites the cost of batteries, heat pipes and other features of mobile engineering as considerable factors in the higher notebook prices, but he also admits that margins on premium notebooks are better "in general".

One long-time industry analyst agrees.

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"The business model of the notebook industry is structured to have higher margins built in to help pay for higher integration, miniaturization, and portable technology that are required for that platform," said Gerry Purdy, president of Mobile Insights in Mountain View, Calif.

Because mobile users are willing to accept a premium for mobility, successful notebook vendors enjoy not only higher margins but higher profits according to Purdy.

However, the price differential has not slipped past IS managers.

"We only get [end users] notebooks if they're on the road a lot. We keep several (mobile) floaters. They can take one of those. It's a lot more cost effective," said Dennis Parker, director of Telecommunications Division of UTSI International, a gas and oil consultancy, in Friendswood, Texas.

The emerging category of mini-notebooks may be one solution in 1999 for workers who need portability, according to Hester.

IBM Personal Systems Group will introduce in 1999 a product "in-between the WorkPad (IBM OEM version of 3Com PalmPilot) and a notebook," said Hester.

The keyboard will be large enough for touch typing with a screen that can be read in any situation. The product is six to 12 months off, according to Hester.

"We will do something in that space. The exact characteristics and when to market is being decided," said Hester.

Acer this week will introduce a 2.8-pound mini-notebook with an 8.4-inch display while Toshiba will announce next week new versions of its 1.8-pound Libretto.

Although the gap doesn't seem to be narrowing, Purdy sees some light at the end of the notebook pricing tunnel.

"While the price gap between similar configurations is wide, the functional difference between a $2,000 desktop and $2,000 notebook has narrowed," says Purdy.

InfoWorld editor-at-large, Ephraim Schwartz is based in San Mateo, Calif.
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