Black Friday Blues

Missing this Black Friday: Windows Vista. Its absence created a vacuum retailers and PC manufacturers filled with some amazing--and somewhat perplexing--deals.

The local CompUSA offered an eMachines PC with 17-inch monitor and Canon printer for a mere $99, when accounting for rebates, Motorola RAZR purchase and two-year cellular contract commitment.

The cell phone contracts--most involving RAZR and some buy-one-get-one-free deals--reminded of 2000, when bargain shoppers could get $99 PCs with 1-3 year Internet service provider commitments. The deals wiped as much as $400 off the purchase price. Deja Vu.

"That's the kind of stuff that generates a lot of ill will," said Stephen Baker, Vice President of Industry Analysis for market researcher NPD.

CompUSA had some other $99 PC deals--all good just for seven hours, or so warned the signs adorning products. I heard about a $99 Compaq notebook, but I didn't see it. The store had a number of instant discounts, usually $200, including a VAIO notebook with 13.3-inch display, Core 2 Duo processor, 120GB hard drive and 1GB of DDR2 memory for $1,199. Sony shoppers could spend less, on a $799 model, with 80GB hard drive, 15.4-inch display and Core Duo processor. Some Compaq and Gateway models sold in the $500-$600 range, with instant discounts and rebates.

Circuit City offered up deep discounts, too, with fewer strings attached. But I could find no $99 deals, either. Still, Circuit City sold a Compaq notebook for $499, after $100 instant savings and another $230 in rebates. Why spend $499 at Circuit City when Staples has another Compaq notebook for a hundred bucks less, after $399 in rebates or instant savings? Shoppers got smaller deals but less hassle over at the local Best Buy, which axed rebates and only used instant savings. Yet another Compaq notebook sold there for $479, after $120 in instant savings.

For the holidays, PC manufacturers and retailers are filling the Windows Vista vacuum with Windows XP Media Center Edition. I saw Media Center selling on most notebooks priced over $500. Until recently, the computer makers reserved the hybrid operating system for higher-end portables with big screens and TV tuners. Now, without Vista to hawk, Media Center appears on more notebook SKUs and for much lower prices. The strategy erodes Media Center's premium value and, presumably, margins on lower-cost models.

Media Center comes on "about half the SKUs," Baker said.

Typically any notebook sold this weekend and priced higher than $500 came with 1GB of memory, presumably in preparation for Windows Vista upgrades. I saw some HP models, selling for well below $1,000, with 2GB of RAM.

For all the deals on Windows XP computers, the big mover seemed to Macs--at least in the Washington, DC suburbs of Bethesda, Rockville and Wheaton. I hung around Best Buy, Circuit City and CompUSA on Friday and Saturday watching the Windows computer sales. While respectable, the local Apple Store looked to be the big mover, particularly notebooks. Sure, many more Apple Store shoppers bought iPods, but the notebooks quite respectfully sold.

The deals on Windows notebooks shocked. While Black Friday deals are typically amazing, I'm watching for deepening discounts as Christmas approaches. This holiday sales season presents unique channel inventory problems, because of Windows Vista. In past years, retailers and PC manufacturers could unload excess inventory during January, usually discounted. Windows Vista's impending, late-January launch is good reason to avoid getting socked with lots of stock on store shelves come December 31. More discounts may be needed to clear inventory. My two cents: Windows Vista's January 30 launch date is in part intended to give retailers and PC manufacturers room to unload any excess Windows XP stock before the new operating system ships.

How can computer manufacturers and retailers possibly raise prices on new Windows Vista PCs, following a period of low prices and during a typically slow sales cycle? Commenters, how would you answer this question?