Upgrade for a great price, but watch 'free' stuff, rebates

I receive dozens of e-mails every week about the dropping prices of computers and when it is a good idea to dump the old machine and move on. And several more letters discuss the cheapest of computers and if they truly are a good value.

Let's talk about the last question first. The very cheapest units on the market today will outperform the best units of five years ago, so if you're still running a Windows 98 computer the answer is pretty clear: You ought to upgrade.

But whether the cheapest computer on the market is a bargain is still the question. When you look, for example, at the current $299 Dell desktop on the market there are a few questions you have to answer.

How Dell got down to that admittedly amazing price point (when Windows XP accounts for $100 of that) includes: whacking the warranty or telephone support to either none or 90 days, depending on the model (you can add more if you wish at extra cost); not including a decent optical mouse (which you will want to add for $10); not including the reinstallation CD for Windows (which you will want to add for $10); and only offering 256MB of computer RAM (which most will want to bump to 512 if this is the model they wish to buy).

What Dell has been doing is not allowing a memory upgrade on the lowest model at all (at least from the factory), which forces some to think they need to move up to the next model. If you purchase the cheapest model, you might want to purchase a memory upgrade.

(After rebate Circuit City recently was selling 512 memory upgrades for $17.99, making adding memory a pretty incredible bargain.)

Also fueling this price drop is the surge in popularity of flat-panel monitors. Because these are now the monitors of choice, the older CRT (cathode-ray tube) monitors have fallen in price like the proverbial rock.

We also ought to talk for a moment about the "free printer" deal that Dell is aggressively pushing, too.

For one, they are offering the printer for free, and then selling the $7 USB cable for $25, which is a pretty large shame. But let's just examine the rationale for a second for why all of these free and cheap printers are floating around out there.

It's what I call the Barbie doll-retailing concept (give away the doll, sell the clothes for 15 bucks).