Wednesday, April 22, 2009

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."


At 4/22/2009 9:10 AM, Anonymous Anonymous said...

but don't believe the units themselves are comparable. the pc manufacturers have sacrificed monitor resolution along with other quality shortcuts (keyboard, fit and finish, etc). you're still going to shell out a couple thousand for a business-class, high resolution, laptop.

At 4/22/2009 10:35 AM, Anonymous Anonymous said...

I have to agree with anonymous. $2000 is still necessary to buy anything but a piece of 1 year disposable crap. Even $2000 isn't quite enough: I am still cursing Toshiba for the 17" laptop we bought 3.5 years ago: I have had to resolder the power supply plug twice and now the CPU fan's giving out.

That said, $2000 is still a win. The best business laptops of 10 years ago (IBM's T series) were around $3000 each. Now, the best (IMHO the 17" MacBook Pro) is again around $3000. A good enough business laptop (the 15" MacBook Pro) is $2000, competitive in price with the 10 year old IBM equivalent.

That's not bad.

At 4/22/2009 11:11 AM, Anonymous gettingrational said...

For $2000.00 today you get computing power (capabilities) that is many times exponentially greater then 10 years ago. Also the software programs and ability to share thoughts and numbers give opportunities not thought possible 10 years ago.

The return on intllectual capital put into computing power is now threatened because of market piracy in new markets (often over 80%).

At 4/22/2009 1:16 PM, Blogger ExtremeHobo said...

No no no, you need the government to place price ceilings on laptops if you want their prices to come down.

At 4/22/2009 1:21 PM, Blogger ExtremeHobo said...

$600 business laptop found in 30 seconds of googling.I am a web developer and I dont understand what you would need beyond this laptop to run anything in my field (Visual Studio, SQL Server Express, Photoshop and most anything else would run near 100%). Another gig of ram would be nice ($30 more if you don't get a good deal).

At 4/22/2009 2:24 PM, Blogger Unknown said...

I don't actually care if they are a 1-year POS, because at $670 I can afford to buy a new one each year and get the latest technology. Why anyone would buy an extended warranty or top-of-the-line laptop today is beyond me. Just a waste of money.

At 4/22/2009 6:38 PM, Anonymous Dr. T said...

The netbooks are low-cost, low-quality, low-reliability devices. Everyone who buys them should consider them to be disposable as of the warranty expiration date. They'll be too costly to repair once they break (and they will).

Patrick doesn't seem to understand that there is value in a bigger, higher resolution, more readable screen; a faster processor with more memory; a higher capacity and quieter hard drive; a sturdier body; and a lower probability of failure. The netbooks don't have the latest technology; they have 4-5 year old CPUs crammed into a smaller box.

At 4/22/2009 7:55 PM, Blogger sethstorm said...

You might have some raw advances, but quality is getting lower. In short, you're getting junk at the $500-600 level.

As one of the adherents to IBM's T series - Lenovo only has made them worse. High-quality S-IPS screens, gone. 4:3 displays(and the space taken by them), gone.

I'd rather buy the behemoth and be ahead of the curve for 3-5 years. Besides, my T42p and T60p are quite good for what they do. That, and they don't suffer for having lower quality displays (they have wide-angle Flexview, not available at any price today). Both of them were very close to $3000 new and I didn't shy away from the cost.

There are costs associated with re-buying every year. If you want to dispose your laptop every year, fine. Just be sure that you want to see worse junk if you go that path.

Unlike your laptops, I'll be buying one laptop that actually lasts over a few of yours that are designed to break.

At 4/22/2009 9:24 PM, Anonymous Mika said...

Ha! I love how we get off on tangents. Mark wanted to make a philosophical point re the greatness of free enterprise and we contributors only get caught up in a specific debate on the quality and merits of various laptops. I guess the latter topic was more provocative and interesting. No matter, just funny.
(Of course, Ehobo never misses any opportunity to take a shot at government intervention :)

At 4/22/2009 10:10 PM, Anonymous Anonymous said...

Laptops are worse than they were 10 years ago? What fucking planet are you living on? I actually still own some $3k laptops from 10 years ago. They're 3 inches thick, 10 pounds, horrible screens (low resolution, terrible brightness and picture quality), battery life is complete crap, etc. etc.

Seriously, have any of you actually used 10 year old laptops?

Competition and free markets have not only made laptops cheaper, but also faster, better, (and thanks to Apple) sleeker and prettier.

At 4/23/2009 1:28 AM, Blogger sethstorm said...

Seriously, have any of you actually used 10 year old laptops?
Why yes I have. The laptop happens to be a good model, not the bottom of the bin you might have described.

Before I sold it recently, I used a Thinkpad 600E. About as much power as some of the lesser netbooks, with very few drawbacks.

I sold it only to trade up to something slightly newer; it still works as I have heard from the buyer.

"Competition and free markets" only have removed quality features.
The victims include normal aspect screens, LCD panels better than TN-based technology, attention to detail in design/construction (that's talking to those ODM rebranders like Dell), and being able to count on hardware not being designed to break at some point(see netbooks and about anything below $1500 new).

I don't think there'd be a laptop that would exist that could even address one if not all of those faults. They simply do not exist.

At 4/23/2009 9:28 AM, Blogger ExtremeHobo said...

Firstoff netbooks are not laptops, they are a whole new type of tech. Thats like comparing a cell phone with internet capability to a laptop. Netbooks are just there to give people a cheap and portable internet with basic applications and multimedia. My Acer Aspire One does things that no laptop can do (run for 3 hours straight while not burning the crap out of my lap).

Also for those of your touting the $2000 laptop. What have you to say about the link I posted? A $600 Lenovo with Vista Business edition and a dual core processor. If youve been convinced you need more than that, thats like trying to convince me you need a BMW over those "cheap Toyotas".

Oh and if your touting a Mac laptop as a business laptop I would have to ask you what "business" you are in.

Can anyone here say why you need a $3k laptop over the $600 dollar one I posted (and I am still saying i would spend another $30 to add another gig of ram to it).

At 4/23/2009 9:57 AM, Blogger Unknown said...

I figured I would get a few people riled up by that last post. I actually don't have to buy a new one each year, the "cheap" computers actually do pretty well if you aren't really hard on them. I think the important point here from a business perspective is how much computer do you really need? Obviously there are quite a few people out there using 3-5 year old machines right now. I'm sure the $600 dollar laptop EHobo is touting will blow the socks off those machines.

So my point is this -- if you know that you can work with one laptop for 4 years why not spend 1/3 of the price and get by for 2 years. By the time 4 years is up you have spent 2/3 of the money you would have spent on the "fancy" one and with advances in speed and technology you probably have a faster/better computer than the "fancy" one would have been. Your 4-year average "cost per gigahertz" is way lower in that scenario.

At 4/23/2009 2:49 PM, Blogger sethstorm said...

Oh and if your touting a Mac laptop as a business laptop I would have to ask you what "business" you are in.
Publishing of some sort? Photoshop, InDesign, and the like do require a bit more than an Atom or a VIA based machine.

I actually don't have to buy a new one each year, the "cheap" computers actually do pretty well if you aren't really hard on them
The closest I ever get to "netbooks" is a 12.1" X31. Small enough to be an "ultraportable", powerful enough to carry out work locally. Not all of us want to depend on a mainframe-era concept of lightweight "terminals" and heavy-weight machines separated by a network connection.

My rationale is to lengthen the purchase cycle by going high-end. Right now, a well-loaded W700ds looks to be where I'm headed next. What I get is something that survives for a long time. The only thing that's missing is the Flexview screen.

At 4/23/2009 3:16 PM, Blogger ExtremeHobo said...

Any dual core will run photoshop with ease.

I would have to point out that another reason laptops (not netbooks different topic) have had a stabilization in price is that processors have finally outstepped the rate of the applications pushing them. Even the oldest Corex2 processor will run Vista with ease and play HD media. Also, video games are no longer pushing computer owners to have the biggest and best thing now that consoles are dominating the market.

I purchased my rig over 2 years ago with a quadcore and there has been no reason to upgrade it to play even the newest games (of course Crysis being the exception).

Jump back ten years. A computer purchased in 98 would be hard pressed to play the newest games in 2000.

At 4/24/2009 5:55 AM, Anonymous CMS said...

Bless my netbook, it has an eight hour battery life, it's cheap and reliable, it weighs just under a kilo and I can access all software and data by using an online hard drive. If you're on the road alot this is the perfect companion.

At 4/24/2009 12:54 PM, Blogger Unknown said...

Oh yeah - great work capitalism! Way to get those prices down!! Woohoo!

Nevermind the regulation that has been required to break up anticompetitive practices in all major sectors of computer industry, i.e. flash memory, microsoft, the list goes on... an expected part of a capitalist economy. The headline should read "Laptop Computers: From $2000 to $670 in a Decade - How come they cost so much after all this time?"

At 4/24/2009 4:42 PM, Blogger Unknown said...

Like anything else, the US and western economies in general bear most of the cost of R&D when it comes to consumer products. Capitalism and intellectual property rights are a real drag on our economy aren't they?

At 4/24/2009 9:51 PM, Anonymous Anonymous said...

I may be a little old (or dense) but crediting Landsburg and not Adam Smith for that last line is a joke. Right?


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