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. Last Updated: 07/27/2016

PC Makers Pare Excess Software

NEW YORK -- Personal computer shoppers can expect to get fewer programs with new PCs this fall as computer makers zero in on software as a way to cut costs, figuring a lot of the software isn't used anyway.


Software companies that rely on selling their programs pre-installed, or bundled, with new PCs have the most at risk in the shift.


But it is a sign of the broader effect of lower prices for computers, forcing manufacturers to address costs that haven't dropped, according to executives gathered at a trade exhibition here last week.


The company most vocal about the change is Compaq Computer Corp., which was No. 2 in retail sales in the United States last year. The company had packaged about 30 software titles in its machines last year, but will have less than 20 this fall.


Executives of Packard Bell Electronics Inc., the leading seller of PCs to consumers, Acer America Inc. and NEC Corp. also said they would cut back their software bundles this fall.


For the past three years, PC makers have increasingly installed more software on machines sold in stores. At first they were trying to attract new PC owners, hoping that a wide variety of software would demonstrate the multiple uses of a computer. In some cases, 60 separate programs would come with a machine, adding $200 or so to a manufacturer's production cost.


"The bundling craze was a reaction to the need to target those first-time buyers," said Gene Longo, an Apple Computer Inc. manager. "Now we're seeing the market mature a little bit, where there are less first-time buyers."


In addition, PC makers found through customer surveys that most people would typically use fewer than 10 of the pre-installed programs, discarding the rest. Then, consumers would buy separately the six to 10 programs they wanted most.


Computer makers said they would still pre-install a representative sample of software, including productivity, reference, games and communication programs. They also said they would place more emphasis on Internet-related software, aiming to make it simpler to go online.


Analyst Jeff Tarter, publisher of the industry newsletter Softletter, said the change is part of a historic pattern in PCs.


"Everytime there's a new platform, a big advance in processing chip or a major operating system upgrade, everybody adds tons of software to create a premium machine," Tarter said. "Then the business goes into a commodity, price-driven phase and the hardware companies squeeze every dime of cost out of the machine."


The average selling price of a consumer-targeted PC is expected to fall sharply this year, after rising in 1995. That's because costs of several key components, most noticeably CD-ROM drives and memory chips, have dropped.