Laptop Computers: From $2,000 to $670 in Just a Decade, Thanks to Self-Interest and Invisible Hand
WALL STREET JOURNAL -- In an effort to drive sales, PC makers such as Hewlett-Packard and Dell have shifted their product lineups toward cut-rate laptops that appeal to frugal consumers. Netbooks -- mini-notebooks with small screens and low-powered processors that sell for less than $500 -- have rapidly gained popularity as manufacturers release new models. And in recent months, computer companies have started selling hybrid machines that blur the lines between netbooks and traditional laptops in terms of pricing, size and computing power.
Dell, meanwhile, is offering a 12-inch netbook -- the Inspiron Mini 12 -- that is almost the same size as a regular laptop. It sells for $399. Asian rivals Acer and Lenovo Group have expanded their discount lineups with more than half a dozen new laptops for under $800 each. And netbook pioneer Asustek Computer recently introduced several new models for less than $350.
All of this means 2009 is looking like a year-long bargain sale for PC buyers. In February, the most recent month for which data are available, the average laptop sold for $671, down from $864 a year earlier, according to research firm NPD Group (see chart above).
NPD analyst Stephen Baker says these prices are record lows for the PC industry, and he predicts prices could drop another 10% between now and the end of the year.
The low prices are also accelerating the shift away from desktop PCs toward laptops. A decade ago, the average desktop cost about $1,000, while the average notebook was close to $2,000, says Roger Kay, an analyst with Endpoint Technologies. But as the price difference has all but disappeared, consumer preference has tilted toward portable PCs. In the third quarter of 2008, notebooks outsold desktops for the first time, according to research firm iSuppli Corp. According to NPD, the average desktop in February sold for $658, just $13 less than the average notebook.
MP: From $2,000 for the average laptop just ten years ago, to only $671 today, with some models selling for $350, saving consumers billions of dollars -- never underestimate the power of self-interested profit-seeking activity. The invisible hand of self-interest is our most valuable resource. As Steven E. Landsburg remind us "It is something of a miracle that individual selfish decisions lead to collectively efficient outcomes."