HP hits bottom with PC prices

Hewlett-Packard is taking aim at rival Emachines by revamping its Compaq Presario desktops for the holidays.

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As expected, HP on Tuesday announced three new Compaq Presario desktops for consumers that start at $399 after rebates.

Emachines, operating largely uncontested at prices under $500, has grown in strength over the past few quarters, analysts say, while HP has been slipping in market share.

HP, with it's three new Compaq Presario desktops, is trying turn the retail tide by taking on Emachines at three out four of the company's main price points, including its $399 starting price.

HP's new Compaq Presario 6300US, for example, will include a 1.4GHz Intel Celeron processor, 128MB of RAM, a 40GB hard drive and CD-ROM. It will sell for $449 and drop to the $399 price after $50 mail-in rebate. The price does not include a monitor.

Meanwhile, both companies are holding out hope that holiday sales will be better than those in the back-to-school season, which posted sales below expectations. For the key back-to-school season, retail desktop unit sales declined 10 percent from a year ago, while notebook unit sales gained 10 percent, according to NPD Techworld.

The other new Compaq Presarios combine low prices with hefty features, HP's dual effort to boost sales and compete with Emachines.

HP will serve the $600 price range with its new Compaq Presario 6320US, which includes an Athlon XP 2000+ processor from Advanced Micro Devices; 256MB of RAM; a 60GB hard drive; and both CD-Rewritable and DVD drives. It will sell for $629 without a monitor, the company said.

The company has aimed its new Compaq Presario 6330US at the $750 price range. The machine will include a 2GHz Intel Pentium 4 processor, 256MB of RAM, a 60GB hard drive and both CD-Rewritable and DVD drives. It will sell for $750 without a monitor.

HP is also likely to combine these new holiday machines with a slew of rebates and other promotions. Retailers and PC manufacturers have used rebates and promotions extensively throughout the year to entice buyers.

HP's more aggressive prices and model configuration on the new desktops also reflect the company's plan to differentiate its two consumer PC brands, the Compaq Presario and the HP Pavilion.

Compaq Presario will focus on aggressive prices, while new HP Pavilion desktops--which are also due for a refreshment later this month or next month--will attempt to deliver more multimedia-oriented desktops, that include features such as DVD-Recordable drives.

But while the new Compaq Presario desktops beat Emachines' current back-to-school desktops on both price and performance, Emachines has plans to battle back.

Emachines is expected to unveil its new fall lineup on Oct. 5. These new desktops will include faster processors and other new features at Emachines traditional $399, $499 and $599 price points after rebates, the company said. Those prices will match the new Compaq Presarios and possibly exceed them on processor speeds.

Meanwhile, Emachines will also likely refresh its $750 desktop and add a brand new model, which is expected to include an Athlon XP 2200+ chip for a price of about $1,000.

The company will also introduce new Emachines-branded 15-inch and 17-inch flat-panel displays at aggressive prices later in the quarter.