PC purchases get 'downsized' during downturn

SANTA BARBARA, CALIF. -- Gartner says PC sales are strong and growing, but if you're looking for optimism in this news, don't look too close. The big numbers mask a new phenomenon where people are spending a fraction of what they used to on PCs.

The economic downturn is largely a crisis of confidence. And when people aren't confident they stop spending. 

Gartner's recent report seems to counter that. The analyst firm announced that Americans bought 17.4 million PCs during Q3 of 2008, which is a 4.6 percent increase over the same quarter last year. 

But if you look at the numbers more closely, something's happening within those unit-sales numbers. Desktop PCs are on the decline -- big time. More people are going with just a laptop, rather than both a desktop PC and a laptop. And more people are buying a $500 subnotebook instead of a $1,300 laptop.

All this is affecting pricing. The prices of PC desktops and full-featured notebooks are coming down, and the price of subnotebooks is probably staying higher than it would otherwise be, simple because demand is so high.

The downturn is also benefiting lower-cost brands. The biggest marketshare jump reported by Gartner came not from HP or Dell, but from Acer. The company's share of the market jumped from 9.7 percent last year to 12.5 percent this year. 

So what does that mean? It means that right now is a great time to buy a desktop PC or a laptop, or buy some other expensive piece of hardware, like a giant LCD. The reason is that because the downturn is relatively new, the supply-demand gap is bigger than it was, and also bigger than it will be later in the downturn (because companies will adjust inventories on the expectation of lower sales). 

So if you have any available cash, you'll save a bundle. One small example: If you check Dell's Home laptops page, there are ten laptops listed, each with the minimum price shown. Of the ten laptops, only two of them are over $1,000. The XPS M1530, which has a 15.4-inch screen, is $999. 

And even though demand is high for subnotebooks, prices are still dropping (my contention is that with all the companies entering this market, they would be even lower without the downturn). HP's Mini-Note is now available for $399, for example. 

On Google's Shopping site, Acer laptops and subnotebooks start at $309 and go up (very slowly) from there. 

In other words, what happens in a downturn in the stock market is mirrored in PC sales. It's actually good news for bargain hunters. 

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