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More Bucks for More Bang

Chart showing PC buyers equate discounts with obsolescence and will instead pay more for advanced functionality.
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Thanks to the PC-marketing wars that started in the late 1980s (and which haven't had a cease-fire since), the retail price of the average new desktop system drops about 30% the year following its introduction. And, trained like Pavlov's dog to anticipate the treat, buyers have been driving down their spending in concert.

But that reflex seems to be subsiding. A study conducted in March by BIS Strategic Decisions, a market-research and consulting firm in Norwell, Mass., has discovered that in the fourth quarter of 1992, end-users came out of the bargain basement, electing to pay more for a new PC despite the continuing downtrend in street prices.

Quarter by quarter, the graph compares A, the average amount spent per unit in 1992 by a new-PC purchaser for all nondiscontinued PCs, including models introduced in 1992. the chart shows the divergent uptick in end-user spending -- the first in many years.

Conclusion: turned off by predictable price slashing and by short product life spans (the average life of a PC model -- from debut to discontinuance -- is less than 15 months), shoppers are equating deepening discounts with aging technologies. "Buyers today are trading in conventional savings for advanced functionality," observes the study's author, Jeffrey Henning, senior industry analyst at BIS. "What they seek now is a PC that will be around for at least three years."

If buyers' willingness to spend earlier in the model cycle takes hold, marketers undoubtedly will charge more up front. but the gain may be short-lived: they won't be able to rely on deep discounting to clear their shelves of aging inventory.

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Last updated: Jul 1, 1993




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