Zardon

NEW YORK (CNN/Money) - Tumbling personal computer prices are likely to fall even further in the coming weeks, creating a window of opportunity for bargain hunters who have been waiting for the best deal.

In the wake of a disappointing back-to-school selling season, PC vendors are getting ready to launch an even more aggressive marketing and promotional blitz aimed squarely at holiday shoppers.

"The guns are locked and loaded for some pretty heavy promotions," said Stephen Baker, director of research at NPD Techworld, a firm that tracks trends in consumer technology sales.

Everybody is going into this Christmas season with very limited expectations, and anything they can throw at the marketplace to get people to go out and buy is going to be a positive," Baker said.

By NPD Techworld's count, retail sales of desktop PCs in August were down roughly 14 percent from August 2001. That was a sharper decline than generally had been expected, and it came in spite of aggressive pricing and promotions like including free memory upgrades, monitors and other peripherals with the purchase of a new system.

Because August is the key month of the critical back-to-school season for PC manufacturers, most of them have rethought their promotional activity, scaling back to a large extent and setting aside the resources available for such programs until late in the fourth quarter.

Some promotions still are under way. Dell Computer, for example, is offering a $50 rebate, free shipping and a free CD burner with its Dimension 2300 desktop, bringing the price down to $599.

At the same time, Gateway-- which recently embarked on a strategy of winning customers with low prices at the cost of corporate profits -- is offering a $100 rebate to buyers of its 500SE desktop, bringing the price down to $699. In May, that system carried a price tag of $849.

But PC vendors soon will begin offering even stronger incentives to buy. The best deals are likely to be found starting around late October through late December, as vendors try to make the best of what is expected to be a not-so-happy holiday season for PC sales.

Most of the best bargains are likely to be found for desktop PCs. Demand for notebook computers has remained relatively firm, with retail sales up 10 percent in August, a trend that is likely to continue in the coming months, according to Baker.

"One of the things that drove sales last Christmas was some really inexpensive notebooks. But we're not really looking to see that happen again this year," he said. "Most of the people who are looking to buy notebooks now are willing to spend extra to get what they want in those products."

Executives of several PC component suppliers, recently have suggested that a protracted slump in demand is likely to weigh on their profits for the second half of the year. And none has been willing to predict when things might turn for the better. A broad shift in demand away from computer systems powered by high-end processors such as Intel's Pentium 4 or AMD's Athlon XP, to machines with less expensive chips like the Celeron and Duron also has brought down the prices of even the most high-powered machines.

While that may be bad news for profit-motivated tech companies and investors, it bodes well for cost-conscious consumers looking for bargains this holiday season. "There's a lot of capacity around, and the demand still seems to be pretty weak," said Roger Kay, an analyst at technology research firm International Data Corp.

"With components in abundance, it's not as if there are any kind of spikes on the cost side," Kay said. "In that kind of environment, you're going to see some very aggressive moves by the vendors in order to get that holiday demand up."

It is unlikely that the base prices of PCs, which over the past two years have fallen dramatically, are likely to go much lower. According to NPD's estimates, more than 60 percent of the desktop PCs currently sold at retail are priced under $800.

Instead, the savings are likely to come in the form of promotions like cash rebates, component upgrades, free peripherals and software, or even no-interest financing.

"They want to stimulate buying behavior now, so they can't just lower the price," Kay said. "They have to indicate that if you don't buy now, you won't get that great price."

Historically, shoppers looking for good deals on PCs could usually find them in late December and early January, as retailers cut prices and offered other kinds of discounts in order to get rid of overstocked systems.

Those discounts typically have been less than 10 percent off the price during the holiday buying blitz, but in recent years have reached as high as 25 percent.

Still, consumers who wait until the post-holiday season this year might be disappointed.

Since they have been stung so many times in the past and are now struggling through one of the most difficult periods in the industry's history, PC vendors this year are being very careful about retail inventory levels.

"At this point, they seem pretty disciplined," said Kay.

"If demand seems pretty weak and the economic signs are all pretty negative, they're going to batten down the hatches and be very cautious about the amount of product they put out there, so they probably won't have to do a huge cleanup after Christmas," Kay added.

NPD Techworld's Baker advised against waiting until after this year's holiday season. "You don't know that you'll get what you want at the price you want," he said.

"The fact of the matter is the product you're looking for is always going to be cheaper, or there's going to be a better product in four months at the same price point," Baker added. "If you wait like that, you'll wait forever. You really have to make a decision that it's time to buy." By Richard Richtmyer, CNN/Money Staff Writer