Buying a PC Can Wait, Say Consumers

Vendors need better bait to lure buyers, who'd rather add to existing systems than replace them.

Tom Spring, PCWorld.com

CAMBRIDGE, MASSACHUSETTS-- Money wasn't exactly burning a hole in Jonathan Rich's pocket as he strolled around a computer store here recently.

Rich, a recently laid-off Internet consultant, says he had once planned to buy a new PC for his 10-year-old daughter. But now he's decided to give her his 2-year-old Hewlett-Packard Pavilion and depend more on a notebook computer for business and personal use.

Likewise, Dan Zoll's longing for a new notebook is quelled by the fact that he's between jobs.

"Don't get me wrong, I wish I could justify getting a new iBook," Zoll says. "But I don't know how long I'll be between jobs--so I'm trying to figure out a plan 'B.'"

In the meantime, Zoll says, he may have to live with a 4-year-old Gateway Solo 2300 that has a hard drive that "sounds like a used Pinto." For now, he's only browsing this local computer store for a memory upgrade for his HandSpring Visor.

"I'm trying to figure out whether or not I can start using my HandSpring for e-mail and word processing," Zoll adds.

Though their work situations may not be typical, Rich and Zolls are fairly representative of today's PC consumers, say market researchers. Computer users around the world are thinking twice about new technology purchases, perhaps considering upgrades to existing equipment instead, according to two recent studies that paint a bleak picture of the PC industry.

Shipments of consumer PCs worldwide are expected to tumble 10 percent this year from 2000, according to a report released by IDC on Monday. Separately, market researchers at Odyssey also released on Monday a similar study, which reports consumer demand for PCs hit a four-year low in July.

While the current state of the economy contributes to weak sales, analysts also cite an over-saturation of PCs. IDC reports PC sales to businesses are down because a large base of adequate PCs is already installed, coupled with a lack of processor-hungry applications. For that reason, many businesses are postponing PC upgrades and new purchases, IDC says.

Not Compelling

That may be true with consumers as well. Some say they simply don't have a compelling reason to purchase a PC.

"I know I'm not using my PC to its fullest potential," says Kasey Marino, a college student. Marino was just picking up his Sony VAIO after it had been upgraded with a refurbished CD-RW drive he bought at the online auctioneer EBay.

"There isn't a lot of technology grabbing my attention these days," says the Louisiana resident, who isn't interested in buying a handheld or digital music player, either.

The PC industry's woes are exacerbated by its own poor communication skills, according to Odyssey.

"Of course people want to do more with their PCs, but they don't know where to start," says Devin McDonell, Odyssey's manager of syndicated products.

Just as a marketing blitz for high-speed Internet access drove PC sales, computer makers need to raise consumer awareness about how a PC can do more, Odyssey researchers suggest.

"PC makers need to offer real tangible benefits rather than trumpeting their latest models as bigger faster and better," McDonell adds.

Can Win XP Entice?

Microsoft's upcoming Windows XP won't necessarily be a savior for PC sales. IDC analysts say consumers will likely delay a PC purchase until summer 2001--despite Windows XP's availability in October.

"For most consumers, a new PC is a very large discretionary purchase," says Roger Kay, IDC analyst, in the recent report. "When it comes to replacing a system that probably meets a user's basic needs, it's an extremely tough sell in these economic times."

Computer store browsers concur, in our informal poll. None considers Windows XP a catalyst for a sale. In fact, many expressed disdain for Microsoft's Passport authentication system and its Product Activation anti-piracy measures.

Delaying Purchases

Analysts and shoppers acknowledge some good deals are available. But while PC price wars may temporarily spur sales, they won't solve the industry's fundamental problem, Odyssey's analysts say. Rather, vendors must give consumers new and compelling benefits that become a reason to replace existing PCs, according to Odyssey.

Circuit City Stores and RadioShack bolster what analysts are reporting. Both firms report lighter demand for personal computers during each of their financial quarters, which contributed to overall weaker sales of PCs.

Demand is down among people who already own a PC, Odyssey reports. Last year, 13 percent of PC-owning households said they were "extremely likely" to purchase a PC. Fast-forward to 2001, and only 8 percent of PC-owning households said they will be "extremely likely" to upgrade. Consumers are hanging on to existing PCs longer than ever, Odyssey says.

A bright light for PC vendors might come from consumers like Tammy Sanders, who is shopping around for a new PC.

"Finally, I'm seeing big improvements in technology and feel like there is a compelling reason to upgrade my laptop," she says. That bright light may be over the horizon, however. Sanders waited four years before she decided to replace her Compaq notebook.