Laptops find strong market as PCs slump

It's been a dismal year for the personal computer industry as a whole, but laptops are one area where the news isn't all bad.

Portable computers have actually held their own. According to the research firm IDC, they accounted for 24 percent of the PCs sold for the second quarter of this year, after breaking through the 20 percent mark last year.

Roger Kay, an analyst with the firm, said that laptops have become more popular at this point because buying a laptop no longer means taking a big hit in terms of price and utility. The gap between laptops and desktops has narrowed: "We're at one of the tighter points right now," Kay said.

Manufacturers say these lower costs have allowed consumers to give in to their laptop envy.

"In general, people would prefer to have a notebook computer, and it's always come down to price point in the past," said Brad Blietz, marketing manager for the Inspiron line at Dell Computer Corp. Computer makers are "reducing the gap to a point where you are seeing more people choose to go with a portable," he said. " This is especially true for students."

Consider what one of Dell's major competitors is offering these days. Gateway Inc.'s Solo 1200, the least expensive laptop in its lineup, includes an 800-megahertz Intel Celeron processor and a 10-gigabyte hard drive for $999.

The least expensive desktop in Gateway's line, the Essential 900c, costs $799 with a monitor and comes with a 950 MHz processor and a 20-gig hard drive.

One reason for the lower price of laptops is their flat, liquid-crystal displays (LCDs), traditionally one of the bigger component costs in a laptop. Prices for LCDs have fallen 50 percent this year, thanks largely to added manufacturing capacity. Even some desktop owners are switching to LCDs instead of bulky cathode-ray-tube (CRT) monitors.

Some analysts have predicted that prices for the panels will bounce back somewhat next year; even the most optimistic don't think the prices can drop much further this year.

Meanwhile, today's laptops are far less constrained than previous models. Their screens now range from 12 to 15 inches across -- equaling or exceeding the viewable area on many consumer CRTs. And their interiors allow for easier expansion of memory and hard drives, while expansion options, from PC Card slots to FireWire ports, have given new flexibility for users to add peripherals.

Finally, the processors in laptops are no longer terribly slower than the ones used in desktops, particularly at the lower end of the market. (At the high end, however, a considerable gap remains -- Intel Corp.'s Pentium 4, for instance, won't even be available in a portable version until next year.)

"Laptops have matured to the point where they make a great replacement for a desktop," said Dave Russell, marketing manager for consumer and education mobile products at Apple Computer Inc. In the past, laptop computers were always a bit of a compromise -- "a necessary evil for those with a traveling lifestyle," as Russell put it.

But while laptops might win an even bigger share of the market, nobody seems to think that they will ever replace desktops.

"Desktops will always have more horsepower, and there will always be applications that want more horsepower," said Blietz at Dell. And for that reason, users who do such work as editing video for a living will probably keep their desktop computers for the foreseeable future.

One area where laptop manufacturers do see more growth possibilities is the educational market. Laptops have always appealed to students who want to be able to access their work in the dorm, the cafeteria and the classroom.

The advent of 802.11b wireless Internet connections means students can even surf the Web from the quad.

Dell says its education customers are the ones most likely to buy an 802.11b wireless card with a laptop. Enterprise customers in large and small businesses are a close second.

Computer manufacturers probably also hope that the education market will bring some overdue good news from parents looking to equip kids going off to college -- and they've been staging back-to-school specials and rebates to prove it.

But there's probably no need to rush to take manufacturers or retailers up on those offers if you can wait until the holiday season.

"There are a lot of good back-to-school sales going on," said Dan de Grandpre of Dealnews.com, a Web site that tracks bargains and discounts on hardware. "But you know what? There were a lot of good sales last month. And there will probably be more good sales next month. There's never been a better time to buy -- it's kind of the upside of a down economy."