Computer Systems Reaching Record Low Price-Point

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Insiders credit recently reduced component costs, record sales growth, and growing internet usage as key contributors.

Computer system prices are at an all-time low - some approaching a fabled $300 price-point that could bring nearly universal usage among US consumers. Several key factors including rapidly declining computer component costs, record sales growth rates, and the spread of internet usage are attributed to this stunning phenomenon. The great news for consumers is that computer retailers are becoming more capable of offering high-end desktops for bargain desktop prices, further fueling the purchasing boom.

Breakthroughs in semiconductor technology play a large role in the cost of computers. The semiconductor industry - the fundamental base of the information revolution, has in the past few years seen astounding growth thanks to groundbreaking technological innovations such as VLSI, magnetic memory, and complex tools for modeling and synthesis. These technological breakthroughs have made possible increasingly complex and faster computers at lower prices. Propelled by a year-on year growth rate of 28 percent, global sales of the semiconductor industry were $219 billion in 2004, surpassing the previous record of $204 billion reached in 2000. As a result of this staggering growth rate, the semiconductor prices have fallen steeply thus contributing to the recent sharp fall in computer prices.

Increased internet usage drives computer sales. Record increases in the number of internet users worldwide are also responsible for the PC boom. Internet usage has soared from 274 million users in 1999 to 605 million users in 2002 - a staggering growth of 119%. In the US alone, the number of Internet users has increased by 53 million (16%) with penetration of 52%. Additionally, the percentage of total world population with internet access has increased to 9% in 2002 from 7% in 1999. It's clear to see that the nearly ubiquitous use of the internet worldwide is going to continue to drive PC sales and reduce prices.

Computer financing opens new options for consumers. Computer financing retailers are finding that they are able to offer much more powerful, affordable, and feature-rich systems to their customers through financing. This purchasing model greatly extends the usable life-cycle of these newly purchased computers. By getting more computer with less initial cash outlay the consumer gets a more robust computer while still staying within their budget.

According to Leonard Durow, Vice President of My Computer Club, "69 million working Americans have a pre-tax income of less than $40,802 which equates to 60% of the working population. These individuals are having difficulties purchasing the more expensive computers and related equipment necessary for their personal use, supporting the proper educational needs of their children or sustaining their small businesses." This helps to explain why many computer retailers are aggressively seeking computer financing programs targeted to individuals who are classified as low income and derogatory credit consumers.

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Leonard Durow


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