Computers were more readily upgraded in the 1990s because technological advances were much more noticeable and new software packages, such as the Windows 95 operating system, enticed buyers, he said.
Computer makers are holding out some hope that Microsoft Corp's Windows XP, which is being touted as the company's biggest upgrade to its PC operating system since 1995, will help reverse the sales slide after it's released on Oct. 25. Dell said this month it expects sales to businesses to improve in the second quarter next year as Windows XP drives PC replacements.
Slowing business investment in capital equipment has also been part of the problem and one of the main reasons cited by the Federal Reserve for enacting five interest-rate reductions so far this year. Corporate spending on equipment and software fell at a 2.1 percent rate in the first three months of the year, after dropping at a 3.3 percent pace in the fourth quarter of 2000, according to the Commerce Department.
Corporate orders, which have historically accounted for about 60 percent of the PC industry's sales, now make up just about 30 percent, according to Thomas Weisel's Ross. Businesses haven't had good reason to return to the PC market since making purchases late in 1999 to get ready for the year 2000.
"I think XP will be a big deal," Ross said. "If you're planning on upgrading, it's a good time to start pricing things out to be buying in the second half of the year." People such as James Stewart may need more convincing.
The 47-year-old father of four was shopping at the Morrow CompUSA for a keyboard his one-year-old had "banged up pretty good." He likens his decision to sit tight with his 1999 IBM Aptiva model to the reason he's still driving his silver 1997 Ford Taurus.
"You see that car right there?" Stewart said. "That's paid off and I'm not buying another until it just about falls apart."
"You could say the same thing for my IBM."
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