updated 10:00 am EST, Tue December 8, 2009
Dell 10Q reveals cost of low-price PCs
Dell in its 10Q forms has revealed increasing problems with its home PC group. The company's average selling price for a home system has dropped 23 percent year-over-year as customers have continued to look for cheaper systems. At the same time, the company has paid a price for the cheaper systems as warranty obligations for repairs and replacements have increased by $42 million over the same period.
In comparison, prices for commercial systems have only dropped by about 3 percent over the same period.
The shift to the low end reflects both the popularity of Dell netbooks like the Mini 10 but also an economy that among Windows PC makers has favored very low-priced systems that are more prone to break. A typical Windows notebook sold for just $519 in the summer where it sold for $658 just a year earlier; at the same time, studies have pointed to budget PCs being more likely to fail than more expensive models, especially in the netbook category.
Apple, which generated over four times more profit than Dell's $337 million in similar quarters, has seen its average prices drop only slightly to $1,410 and has been reported as having a significantly lower failure rate.