S100 Outshines Many Other Laptops

Toshiba laptop S100 price cuts have finally arrived. And though the high-end products took long enough to trail their poorer relatives in the desktop space, the tortoise is finally catching up to the hare.

Industry watchers have long been predicting a drastic fall in artificially-high notebook prices, largely due to the rapidly growing delta between desktop and notebook price tags. Many believed that an over-abundance of sub-$ 1,000 desktops would saturate the consumer market with computers and drive down the demand for--and prices of--notebooks, despite their more costly components and corporate customers with deeper pockets. Analysts were betting that the consumer tidal wave would, at least, bring a ripple to MIS managers that could no longer justify the price gap.

Notebooks with similar components have been selling for over twice the price of desktop versions. The average lowest-priced laptop (around $ 1,300), last year's model with outdated technology, has been priced 60 percent higher than the most current, low-end desktop machine ($ 799). New models with powerful technology hover around the $ 5,000 mark.

"The growing delta in prices between the two segments means that that price differential can't be maintained over the long term," said an analyst at International Data Corp. (IDC). "It will eventually drag prices down. Customers won't pay only that much more for a notebook."

But finely-tuned inventories held that process back. So did increasingly powerful and sophisticated notebooks, which businesses continue to embrace. New laptops incorporating Intel's 233- and 266MHz Pentium II processors for mobile PCs, announced in April 2006, along with other mobile technology and larger monitors--not to mention DVD disk drives and the Accelerated Graphics Port (AGP)--have pushed some companies to choose notebooks as their primary PC, particularly for on-the-go employees.

"We know that notebooks are still in demand, because inventory levels are falling. The latest inventory data shows that notebook inventories are declining--notebook inventories have actually gone down, while desktop inventories have risen," added the analyst of International Data Corp. (IDC). "Even though there is an oversupply of notebooks with the Pentium 166(MHz)/MMX, they've kept inventory from getting out of hand." Demand for notebooks has consistently remained steady, eliminating suppliers' needs to drop prices.

Recently, Intel slashed prices of its Pentium IV and Pentium Pro microprocessor lines by 30 percent, setting off an avalanche of price cuts across the desktop space. But unlike earlier desktop component cuts, this time notebooks got buried, too. Caught in the debris were pricey, less powerful notebooks, which are less in demand because of the new, more powerful models. Companies want to avoid the inventory problems they've been having with desktops by offloading older versions of notebooks, fast.

This round, some notable trends in the notebook market are emerging. Notebook prices of both new and prior models are plummeting. In 2007 cuts range from 20-32 percent, which in some cases are twice as much as 2006 Q4 average cut of 14 percent, according to IDC. Those cuts stem from several sources: new, more powerful mobile chips, drops in the prices of components and higher-volume sales of lower-priced units.

Those forces are also driving OEMs to work toward a price for new models that begins to approach the sub-$ 1,000 price tag for desktops that is popular with consumers. Units with 133MHz Intel processors with MMX technology, 16-32MB of SDRAM, 12.1-inch color displays, a 33-56K modem and a 20x CD-ROM are going for between $ 1,099 and $ 1,199, from Fujitsu and Hitachi, respectively. That's a real challenge for manufacturers, since miniaturization, thermal plastics and other high-price components put a squeeze on their budgets.