On the macro level, that race to the bottom seems foolish, but as Baker pointed out, every OEM believes that they will come out the winner in the struggle for market share, and somehow make it up on volume.
"This is a pretty mature market, and one of the easiest and most effective ways to change the conversation in a mature market is to do something on price," Baker argued.
Baker expected that the price cuts would resume during the end-of-year holiday sales season, again because OEMs and suppliers, the latter including Microsoft with its Windows OS, believe that market share is up for grabs.
Although Windows PC OEMs "will already tell you that they're pretty far down there" on margins, Baker said that with even more aggressive subsidies from Microsoft -- which kicks marketing money OEMs' way -- consumers will see lots of PCs in the $199 to $249 range during the holidays.
"Black Friday we'll see some pretty aggressive prices in a lot of categories, including PCs," Baker said.
Much of Microsoft's efforts to drive prices down stems from the threat it perceives from Chromebooks. "They're being very aggressive on entry-level devices, and have put a stake in the ground," said Baker.
But by doing so, Microsoft has adopted not only a risky strategy, but has repudiated the marketing message it had relied on for the last two years.
"They've spent the last two years talking about how important touch was," said Baker, of Microsoft's pitch that Windows 8's touch-first strategy was the future of PCs. "Now, they're going back and telling us that what's important is devices with the full Windows."
Although NPD said that during back-to-school, 2-in-1 convertible notebooks -- those with non-detachable displays that can twist and rotate to be used as a touch tablet -- accounted for 13% of all Windows sales by unit volume, the push towards lower prices has effectively abandoned traditional clamshell-style laptops that feature touch screens. Those notebooks were once Microsoft's emphasis.
"There's lots of growth in traditional non-touch notebooks, and lots of touch in an interesting new device form factor [in convertibles], but there's a shrinking market for what we expected would be the mainstream, touch-enabled clamshells," said Baker.
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