Computer Makers Gear Up for Back-To-School Sales

LPH · #1 (**permalink**) 06-18-2004, 07:54 AM

Graduation ceremonies may still be taking place around the world, but computer makers are already gearing up for the lucrative back-to-school season.

First on their target list are the educational institutions that buy computers for their students, and then the students themselves, who will head to the Internet and retail stores starting next month, largely to buy notebook computers.

Education sales are one of the key factors for revenues at PC companies during the second-quarter, an otherwise low sales period. Companies often discount their products as they fight to win the loyalty of these students early on. Back-to-school buying can also give a boost to retailers during the summer, when shopping for some items otherwise slackens.

Analysts said demand for computers should hold throughout the next few months, improving from a year ago. Personal computer sales dropped off after the Internet bubble burst in 2000, but have since recovered as consumers and companies replaced their systems.

"Last year notebook sales for back-to-school were through the roof compared with previous years, but we're looking for positive growth again," said Stephen Baker, an analyst for market research firm NPD Group.

Wireless communications will also be part of this buying season, Baker said, pointing out that changes in technology are making it easier to connect different systems without wires.

Schools and universities are already in the midst of negotiations with personal computer companies such as Dell Inc. DELL.O , Hewlett-Packard Co. HPQ.N , Gateway Inc. GTW.N and Apple Computer Inc. AAPL.O on contracts for computers they will start using next fall.

Gateway, which has lost both money and market share in recent years and recently bought eMachines to try to compete, recently announced a deal to sell 4,000 tablet PCs to a Minnesota university, for instance.

Meanwhile, the PC companies are planning to barrage buyers with cheap notebook computers with wireless access for July and August aimed at students stocking up before returning to their universities.

"The notebook is becoming a must have for college kids....The versatility of these products, the larger displays and better displays and the flexibility of DVD drives are also helping demand," said John Solomon, vice president of HP's consumer imaging and printing group.

In mid-July, Dell, the No. 1 personal computer maker, is planning to start advertising its notebook computers on television. Dell's pitch puts the notebook computer at the center of a system that also includes a printer, digital music player and small flat-panel display, all of which will be aggressively priced, an executive said.

The company has already started selling a $699 entry-level notebook, Dell general manager of consumer Mike George said. Dell is still aiming at the upper end of the market though with a notebook aimed at video game players that starts at $2,349.

The sales campaigns come during months when PC stocks can make few gains. During June, July and August last summer, Dell shares gained 4 percent while HP fell 5.6 percent.

Intel Corp. INTC.O , which makes the microprocessors that are the brains of the vast majority of personal computers, has been planning for the back-to-school season with new chipsets that are designed to enable the computers to run beefier programs.

Graphics particularly have taken a leap forward with the new Intel chipsets, Martin Reynolds, an analyst at Gartner Group, said, which is a good thing because the most recent video games require the latest PCs to display them properly.

"Games now are so sophisticated a two-year-old PC won't work well with them," Reynolds said.

Large retail computer stores are also targeting the notebook market including Best Buy Co.BBY.N , which accounts for the majority of notebook computers sold in retail outlets.

The company told analysts recently that it planned to expand the number of notebooks that it sells as it tries to take market share during the back-to-school season.

Office Depot Inc. ODP.N said it is external devices that will drive demand this school season as more and more desktop computers start to act like computer servers.

"We're seeing people looking at their older machines and realizing its time to upgrade," said Jamie Columbus, a merchandizing director, citing video cameras, and digital music players as well as printers and networking equipment.

Computer makers gear up for back to school

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