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Will PCs outsell TVs in 2000?

INTERACTIVE: Will PCs outsell TVs in 2000? Yes No View Results

February 25, 1999
Web posted at: 8:28 a.m. EST (1328 GMT)

by James Niccolai

PALM SPRINGS, Calif. (IDG) -- Worldwide PC sales will overtake television sales next year, driven by low-cost computers and the popularity of the Internet, predicted Paul Otellini, executive vice president and general manager of the Intel Architecture Business Group, speaking at the Intel Developer Forum this week.

PC sales already outnumbered sales of TV sets last year in Australia, Canada, Denmark, and Korea, Otellini said. Intel expects the trend will be mirrored worldwide before the end of 2000.

PC prices drop

The popularity of low-cost PCs is driving down the average price of computers, the Intel executive said. Sub-$1,000 PCs accounted for almost a quarter of worldwide PC sales in last year's third quarter, he added.

Analysts say Intel was caught off guard last year by the sudden surge in interest in sub-$1,000 PCs, helping rival Advanced Micro Devices gain some market share at Intel's expense. Intel has pulled up its socks since then and is engaged in an aggressive price struggle with AMD.

"We see that value PCs are a real part of the business, not just an aberration," Otellini said. The budget PC is now largely a consumer phenomenon, he noted. "We believe low-cost PCs will come to the business market in the next couple of years," he said.

Intel defines "budget" PCs as those priced less than $1,200. While sales of low-cost desktop PCs grow, consumers can expect notebook PCs to drop in price too. The price of an average low-cost notebook will fall from $1,900 to $1,500 to $1,200 over time, he predicted.

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"We're working with our industry partners to find the next price point," Otellini added. "Maybe it will be $999, we don't know. But we want to make sure we have the products in place to support that [lower price point]."

New CPUs on the way

Intel has outlined plans for new processors and chip sets, some of which are designed for the budget market. In the second half of this year, Intel will increase the speed of its Celeron desktop processor to 500 MHz and jack up the speed of the mobile Celeron to 400 MHz, said Albert Yu, senior vice president and general manager of the Intel's Microprocessor Products Group.

Meanwhile, the industry must work hard to attract the roughly 50 percent of U.S. homes--and 80 percent of homes worldwide--that currently have no PC, Yu said.

Low-cost computers aren't yet attracting new users, Otellini noted. Rather, 80 percent of computer buyers in the U.S. are repeat buyers.

Despite the challenges, worldwide PC sales will continue their double-digit growth march unabated, Otellini predicted.