PC PRICES IN '92 WILL FALL FURTHER BECAUSE OF HEAVY COMPETITION New products are expected in pen-based systems and color laptops


The new year is upon us, and it is customary among pundits to try to divine what lies ahead in 1992 from what occurred in 1991. For personal computer users, 1991 was a tumultuous year. The coming year promises no less.

It does not require much of a leap to predict that computer prices will continue to fall, as they have every year since the industry started. PC makers have realized that if they are to survive in 1992 (and some of them may not), they must reduce their manufacturing costs and learn to survive with thinner profit margins.

The pressure will be most intense on the big companies, including IBM, Apple Computer Inc., Compaq Computer Corp. and Tandy Corp.

There will be sharp downward price pressure at the retail end, too, as more and more shoppers discover the benefits of buying directly from the manufacturer and through discount super stores.

Many people, knowing that prices will be lower six months ahead, may decide to postpone buying a PC. President Bush would not approve, of course. We look at it this way: If you really need a PC, any savings you might realize by waiting will be more than offset by your loss of productivity in the interim.

Also, unless you are shopping for a pen-based computer or one of the forthcoming sub-notebook and color laptop models, there does not appear to be any compelling technical advance on the horizon that warrants waiting.

In hardware, the most interesting new products are expected in the areas of pen-based systems, sub-notebooks, color laptops, wireless networks, high-resolution monitors, "clone" microprocessors, and (for lack of a better term) multimedia, which encompasses better sound, better pictures and a CD-ROM drive. This year will also see the sharpest collision yet of high-end personal computers with low-end technical workstations.

IBM, which despite its travails is still by far the biggest force in the personal computer industry, is generally expected to introduce a pen-based computer.

Pen computers are operated by making gestures with a pen-like stylus on a flat screen instead of by typing on a keyboard. A key will be the availability of pen-aware software, especially software that can recognize handwriting with a reasonable degree of accuracy.

NCR Corp., which was acquired by AT&T; last year, and Grid Corp. already have proven pen-based computers, and some interesting new models from small companies are just arriving. It will take a big name, like IBM or Apple, to push the technology into the mainstream.

The sub-notebook category refers to personal computers that fall somewhere between palmtop devices, like Hewlett-Packard Co.'s popular HP95LX, and the standard 8.5-inch-by-11-inch notebook machines.

Notebooks are still too heavy and bulky to carry everywhere, and palmtops do not allow touch typing and easy access to standard business software. Look for them late in the year.

Color screens on laptop computers are already appearing, but at a stiff price premium. Prices are expected to fall to mainstream levels by the end of the year.

Oh yes, and get ready to upgrade to a faster processor, more memory and a bigger hard disk, because you will need them to take advantage of new software.

A titanic struggle is ahead in software, especially in the area of operating systems. An operating system is the underlying software that allows all the components of the computer to work coherently, and it determines what kind of spreadsheets, word processors, games and other application software can be run.

Although DOS is still the primary operating system for about 70 million PCs worldwide, 1992 may be its last meaningful year. Most commercial software developers have turned their efforts to newer operating systems, especially Microsoft Corp.'s Windows. We have not seen any truly innovative new DOS programs in some time.

A faster and less rickety version of Windows is scheduled for release in April. But Windows is an extension to DOS, not a separate entity, and is therefore heir to all the infirmities of its underlying base.

The true advances in 1992 will come from operating systems that leave DOS and its decade-old limitations behind. DOS was designed for computers that were obsolete many years ago.

In this post-DOS software realm, Microsoft is preparing an operating system called Windows NT, for New Technology, and IBM is preparing a new version of its OS/2 operating system, version 2.0.

(Microsoft and IBM used to be partners in developing OS/2, but the two former allies are now bitter rivals.)

Software companies invariably understate how much memory, processing power and hard disk space will be necessary to run their operating systems along with any meaningful applications. Our early guess is that both Windows NT and OS/2 2.0 will require a minimum of six to eight megabytes of system memory, a fast 386 or 486 processor and at least 100 megabytes of storage.

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