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Promos Drive Better-Than- Expected PC Sales

With just over one week left in the holiday selling season, the massive promotions for PCs appear to be working with sales going better than expected.

For the period through the Thanksgiving weekend, desktop PC sales were down just 10 percent compared to the same period in 2000 and notebook computer sales up 5 percent, said NPD Intelect hardware analyst Steve Baker. While these numbers may not break records, they are better than what were originally anticipated. The slow economy and the war on terrorism had pushed PC sales down 20 percent to 30 percent in the months following the Sept. 11 attacks.

All the major retailers and vendors are running promotions to draw people into the stores, but Baker thought what was really pushing PC sales was vendors offering great configurations for a good price.

“I’m not convinced people buy PCs just on price. Pricing is now pretty consistent. People buy them to meet a perceived need, not price,” Baker said.

The promotions being offered this year are having some effect, particularly with entry-level PCs, said Toni DuBois, PC analyst for La Jolla, Calif.-based ARS. The promos are being offered for PCs of all prices, but the models receiving the most action are at the lower-end of the price spectrum, she said.

“I don’t think high-ticket items will fly out the door this year,” DuBois noted.

ARS reported that the vast majority of the promotions being offered are of the mail-in rebate variety. Of those, 58 percent are retailer-based and 28 percent are generated by manufacturers. Since only 75 percent are usually redeemed, these work out in favor of the companies, DuBois said. Six percent of the promos offer free upgraded or peripherals to the consumer and 1 percent are instant cash off rebates.

This last type does the best job of attracting customers, DuBois said, but because of the 100 percent redemption rate, is quite rare. So far this year Circuit City has been the only major retailer to make this offer, she said.

Another interesting promotion that has the potential to attract customers is Gateway’s $99 offer to send a technician to a consumer’s home to set up a wireless home network. DuBois said that while wireless networking is not yet a mainstream product the offer shows that the vendor/retailer is trying to bring some ingenuity to its promotions.