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Computerized Investing > October 2011

PC Buyer’s Guide 2011

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by Wayne A. Thorp, CFA

Another turn of the calendar has gone by, and it is time once again for Computerized Investing’s annual PC Buyer’s Guide. As always, our intention is to highlight the relevant factors to consider when buying a new PC to help you in the computerized investment and tracking process, including such tasks as portfolio management and tracking, stock and mutual fund screening, and technical analysis and charting. Furthermore, the systems we recommend will also be able to handle everyday tasks, including email, word processing and Web browsing.

Our recommendations are based on our own experiences and trends in the software and computer industry and should allow you to run the top investment-related software titles currently available to individual investors. Depending on your own computer and investment experience and expertise, your ideal system may vary from our recommendations. This buyer’s guide is unique in that our recommendations are intended to allow you to run the widest variety of investment-related software titles both today and for the next few years.

Defining Your Needs

Before you start down the path of buying a new computer, you should first ask yourself whether or not you need a new one. The lure of having the latest technological marvel is strong for many of us, including myself. However, just because a computer isn’t the latest and greatest doesn’t necessarily mean it is obsolete. But if your current computer is more than a few years old, realistically, it is time for a new system. If you are a Windows user and are not running XP, Vista or Windows 7, it is also time to upgrade your hardware and operating system. Mac users running anything previous to Mac OS X 10.5 should also consider an upgrade.

If your computer is only a couple of years old, but it is running slowly or you are constantly deleting files to free up disk space, there are a few lower-cost options you can take to upgrade your system. These include adding additional memory (RAM) or adding hard disk space with an additional internal drive or an external drive.

The recommendations we make here are based on our assumptions about the computing needs of the typical individual investor. However, as we have said, everyone’s needs are unique. Therefore, if a new computer is the route you wish to take, it is a good idea to assess your current and future computing needs before you start shopping. Ask yourself the question: What do I need from a new computer?

Walter Mossberg, the highly regarded technology writer for The Wall Street Journal, has referred to the computer as “an appliance we use every day.” Like many appliances, there is little to distinguish one computer from another anymore (at least on the inside), so computer makers, by and large, compete on price (and to a lesser extent on looks). As a result, consumers have benefited from a steady downward trend in computer prices, even as computing power has risen exponentially. Sub-$1,000 Windows PCs are the norm these days—for both desktops and laptops—and these systems will last you for the next few years. Unless you really try to pinch pennies and opt for a low-end system, it is highly unlikely that you will buy a PC that is too limited for your purposes. You run a greater risk of overspending on features that you don’t need for your level of computing.

The other goal we hope to achieve with this guide is to focus your attention on those factors that are most relevant when buying a new computer, to help you buy the computer that fits your needs while avoiding paying for extras you really don’t need.

The Age-Old Question: Mac or Windows?

Very few things I have written in my nearly 15 years with Computerized Investing generate as much feedback or passion as my discussions on choosing an operating system (OS) for your computer.

As part of your needs assessment prior to buying a new computer, you need to decide what types of software you plan on running. This is especially true if you use specialized investment analysis, tracking and research titles, as many will only run on certain operating systems. As a result, your software needs will have a direct bearing on which operating system you choose.

Today, your choice—with apologies to Linux aficionados—will come down to Mac OS from Apple and Windows from Microsoft. Windows controls an overwhelming share of the operating system market worldwide. Depending on the source, Windows’ market share ranges from 85% to 95%. According to NetMarketShare.com, which tracks market share trends in Web browsers and operating systems, Windows controlled over 92% of the global market in September 2011, a slight uptick from the same time last year. Meanwhile, Mac had 6.4% of the global market, which was also an increase over 2010.

These increases have come at the expense of Linux, the open-source operating system that, like Mac OS X, is derived from UNIX, which controls roughly 1.1% of the operating system market. Because it is open-source and freely distributable, Linux is the operating system found on many budget systems, which are cheaper because the companies do not have to pay fees for a Windows license.

Windows 7

Since its release in October 2009, Windows 7 has been widely hailed as the most stable and secure version of the Windows operating system. Since October 22, 2010, it has also been the only Windows version available on new PCs. There are multiple versions of Windows 7 available: Starter (only available pre-installed in the U.S. on small notebook PCs or netbooks), Home Premium, Professional and Ultimate. For a complete rundown of the differences between each edition, visit the Microsoft website: windows.microsoft.com/en-US/windows7/products/compare.

If your current Windows system is running 98, NT, 2000 or XP, it is likely more than a few years old, so you are probably better off buying a new PC to upgrade the hardware and the OS. Furthermore, Microsoft has made upgrading from non-Vista PCs to Windows 7 complicated enough that buying a new system is the preferred route, unless you are a true techie.

If you are running Windows Vista, we strongly suggest an upgrade to Windows 7, even if you don’t opt for an entirely new PC. Performing an “in place” upgrade from Vista to Windows 7 is relatively painless and straightforward, assuming you move from an equivalent version (upgrading from Vista Home Premium to Windows 7 Home Premium, etc.) or take a step up (such as from Vista Home Premium to Windows 7 Ultimate).

32-Bit Versus 64-Bit

If you are looking to buy a new Windows system, you may run across 32-bit and 64-bit designations when it comes to the operating system. Prior to Windows 7, 64-bit systems were considered the realm of technology enthusiasts or software developers. However, today most new Windows 7–based laptops and desktops are running a 64-bit version of the operating system.

Basically, 64-bit systems can handle greater amounts of memory, or RAM. The theoretical limit for 32-bit systems is 4G (four gigabytes) of memory, although a variety of factors lowers this to around 3G. Most of today’s 64-bit systems are shipping with up to 8G of memory. According to Microsoft, 64-bit versions of Windows 7 can support up to 192G of memory.

The benefits of 64-bit technology become apparent when you are using large amounts of memory. However, even then this only applies to certain functions: “normal” computing functions such as word processing and Web browsing will not reap any added benefit from having a 64-bit system. However, functions such as graphics processing and scientific calculations will get a boost in performance.

If you are upgrading from an older 32-bit version of Windows to a 64-bit version of Windows 7, be aware that you may not be able to run 32-bit-based software on it. For this reason it is a good idea to check with the software manufacturer to determine whether a program will run on a 64-bit system.

 

Windows 8

Although Windows 7 has been viewed as a success for Microsoft, the company is currently working on the next version of the Windows operating system—Windows 8. Not expected to be released until mid- or late-2012, pre-beta developer versions are available and have been creating quite a buzz. Windows 8 will sport an entirely new user interface (UI), a Windows Store to compete with the Mac App Store, improved security features and the latest version of Internet Explorer (10). According to Microsoft, Windows 8 will also be the first edition of Windows that will run on both ARM-based tablets and devices and traditional x86 PCs running ARM processors from Intel and AMD. [ARM processors are found in many consumer electronics devices, including smart phones and tablet/slate PCs.] This means Windows 8 will operate on the whole spectrum of computing devices.

Mac OS X

Apple is considered by most to be the gold standard in the tech sector when it comes to innovation, quality and customer loyalty. The turnaround orchestrated by the company’s late founder, Steve Jobs, in the early 1990s is a thing of management legend. With such revolutionary products as the iPod, iPhone and iPad, as well as services such as iTunes, Apple has changed the way individuals interact with technology and consume media and left its competition scrambling to play catch-up.

Recently, Apple has been the sole bright spot among technology firms, as the computer industry suffers through sluggish demand due to the rough global economy and a preference for tablets and smartphones over traditional laptops and desktops. For the quarter ending June 30, 2011, Apple saw its PC shipments increase almost 15%, according to research firm IDC, making it the third-largest PC vendor in the U.S., with a 10.7% market share.

The latest version of Apple’s operating system—Mac OS X—is version 10.7 or Lion. Introduced on July 20, 2011, and costing $29.99, Apple reported that over one million copies of Lion were sold on its first day of release. At the time of this writing, over six million copies had been sold. Initially, Lion was only available for download from the Mac App Store, which meant that anyone running Mac OS X Tiger or Leopard had to first upgrade to Mac OS X 10.6 Snow Leopard. Besides Lion, Snow Leopard is the only other version of Mac OS X compatible with the Mac App Store. However, you can now also download a copy of Lion at a retail Apple store or order a Mac OS X Lion USB installation flash drive for $69.99.

Uncharacteristically for an Apple product launch, Lion has received some less-than-favorable reviews. In addition, two security flaws were reported in the initial release of Lion. The most serious of these flaws allowed attackers to change a user’s administrative password without first knowing the target’s original password.

Apple claims that Lion offers 250 new or changed features. To learn more, visit the Apple website: www.apple.com/macosx.

Windows on a Mac

Historically, the Mac OS has been hailed as more secure, stable and user-friendly than Windows. However, this has not translated into significant market share. Either as a cause or as a result, the number of Mac-based software titles is dwarfed by that of Windows-based titles. This is especially true when it comes to investment analysis and tracking software. For software companies, it is a matter of economics—many choose to allocate resources to developing software that can be used by the largest group of consumers.

For Mac users, the majority of software titles are personal finance managers (PFMs) such as Quicken Essentials for Mac. However, even when there is a Mac equivalent of a program, it often lacks some of the more advanced functions and features found in the Windows counterpart.

This fact prevents many Windows users from switching outright to the Mac OS and has led many Mac users to own a separate Windows system just to run certain Windows titles that are not available for the Mac.

As the hardware used on both Mac and Windows systems have converged over the last several years, a number of utilities now make it possible to run the Windows operating system, and Windows programs, on a Mac.

Apple’s Boot Camp, which has been included as a full release with Mac OS X since Leopard (10.5), allows users to install and run Windows on a Mac with the full capabilities and speed of a Windows machine. The biggest drawback, however, is that you cannot run Mac OS X and Windows simultaneously—you must reboot your system in order to switch between operating systems. Boot Camp 4.0 is the latest version of the utility and was released with Mac OS X 10.7 Lion. Unlike previous versions, which supported Windows XP, Vista and Windows 7, version 4.0 only officially supports installations of Windows 7.

Another option for those looking to run Windows on a Mac (with an Intel processor) is to use virtualization software, whereby you can run native Windows and Mac programs simultaneously. Running two operating systems at the same time can place a significant burden on your system’s resources; in addition, Windows does not get full control of all the system’s hardware. As a result, these virtual systems usually aren’t as fast as using Boot Camp, and some functions, such as 3-D graphics, don’t run as well in virtual environments.

Two programs that allow you to run Windows in a virtual environment on a Mac-tel system (a Mac with an Intel processor) are Parallels Desktop for Mac 7.0 (www.parallels.com), released on September 6, 2011, and VMware Fusion 4.0 (www.vmware.com/products/fusion), which was released on September 14, 2011. Both support Mac OS X Lion and require a Mac-tel system. VMware Fusion is available for a 30-day free trial, after which the cost to purchase is currently $49.99. Parallels is also available to try for free for 30 days, after which the cost for new customers is $79.99.

Keep in mind that no matter which option you choose for running Windows on a Mac, you will need to pay for a Windows license.

Platforms

After choosing an operating system, you must pick the platform to run it on. Historically, this has meant selecting a laptop or desktop, but the mobile market has widened over the last several years to include traditional laptops/notebooks, netbooks, ultra-mobile PCs and more. Globally, portables outsell desktop PCs, and their prices have fallen while their power and functionality have increased. The line between desktops and laptops has blurred over the years; some new desktops are actually smaller than some laptops, while some laptops offer features and capabilities rivaling those of traditional desktops.

Laptop Versus Desktop

Portable PCs and desktops each have distinct advantages and weaknesses, and the decision as to which is best for you often rests on the answers to the following questions:

  • Do you need a computer when traveling?
  • Do you need a computer in multiple locations?
  • Is space at a critical premium in your home or office?

If you answered yes to any of these questions, you may want to consider buying a notebook/laptop system.

Alternatively, the following situations may lead you toward purchasing a desktop system:

  • Budget constraints,
  • Preference for a larger display, or
  • Looking for the most powerful PC available.

Another consideration is the ease with which desktop systems can be upgraded compared to laptops (generally speaking). Desktop systems tend to be easier to repair and upgrade, mainly because of the availability of “generic” components that you can install with relative ease and that won’t present compatibility issues.

Notebook PCs, on the other hand, tend to have hardware designed specifically for the model, making them more expensive to repair and more difficult to upgrade. You may be able to find a new hard drive or memory modules from a local electronics store or through an online retailer, but you are more likely to encounter difficulties installing component upgrades on a laptop. Even the latest Mac laptops have batteries that can only be replaced by Apple.

Lastly, there are definite cost considerations when buying a laptop (and cost advantages to buying a desktop). Expect to pay a premium for mobility. As Table 1 shows, the there is a definite price difference between comparably equipped mid-range desktop and laptop/notebook systems.

Ultra-Mobile Devices

Mobile devices have been the most significant trendsetters of the last few years in the computing world. According to ABI Research, over 37 million “ultra-mobile devices” (UMDs) are expected to ship in the U.S. this year. These devices include netbooks, ultraportable notebooks and media tablets.

Netbooks

ABI Research points out that no UMD segment has sustained a lead for more than 36 months, which is roughly the arc netbooks have taken. Three years ago, netbooks were the darling of the PC world. These small-to-medium-sized laptops are optimized for Web browsing and email. According to ABI Research, they peaked in 2010 when 9.9 million units were shipped; over the next few years the netbook’s popularity is expected to shift to developing regions where there is a need for inexpensive computers.

Most models range in price from $200 to $500, making them relatively inexpensive compared to traditional laptops/notebooks. However, the typical netbook has a display only between 10 inches and 12 inches, a smaller keyboard, and no internal optical drive (CD or DVD). As a result, these systems are considered a complementary product—consumers purchase them in addition to a desktop or “traditional” laptop, not instead of one.

If you are looking for a highly portable platform for email, Web browsing and basic word processing, Asus, Toshiba, HP, Samsung, Dell and Lenovo all sell netbooks that cost less than $500.

Ultraportable Notebooks

Attempting to satisfy the need for highly portable computers with more power than a netbook, computer manufacturers have started producing ultraportable notebooks with larger, higher-resolution screens and more powerful processors. This segment has been defined, thus far, by the Macbook Air, which has a high-definition screen ranging from 11 inches to 13 inches, the latest Intel Core processor, and a solid state drive (SSD), all while weighing less than three pounds. The price for a new Macbook Air currently ranges from $999 to $1,599.

In an attempt to counter Apple’s dominance, Intel has defined a new class of ultraportable laptops called Ultrabooks, a term the company trademarked in May of this year. They are intended to offer the convenience of tablets and the functionality of larger laptops/notebooks, as well as a Windows alternative to the Macbook Air. The specifications that Intel has submitted to manufacturers looking to produce Ultrabooks are as follows: thickness of less than 0.8 inches; battery life of at least seven hours; 11- to 13-inch display; weight less than three pounds; SSD storage; and price less than $1,000. Analysts feel that once Windows 8 is rolled out in 2012, more Ultrabooks will come to market that are less expensive and should pose greater competition to the Macbook Air.

Media Tablets

Since early 2010, tablet PCs have been all the rage. With the Apple iPad in the vanguard, the impact of tablets has been felt at all levels of the computing industry. The market is now flooded with a number of tablets, all vying to be the “iPad killer.”

Generally speaking, a tablet PC is a portable computer equipped with a touchscreen as the primary input device. True tablets lack a physical keyboard, offering instead a virtual, on-screen substitute. However, convertible tablets are coming to market that have a physical keyboard similar to that of a netbook or ultra-portable PC and a swivel screen that converts it into a tablet.

Like netbooks, tablet PCs lack the computing power of a typical notebook/laptop computer, both in terms of processing power and storage capacity. Also similar to the netbooks they are quickly replacing, tablets are best suited for Web browsing, email, and running native applications, or “apps.” For this reason, tablets are not a replacement for notebooks if you need to run “standard” software titles and are performing tasks such as Web development, editing videos and photos, or creating long documents.

Where to Buy

Once you have settled on the type of system you want to buy, the next step is actually purchasing it.

Here too you have several options: you can buy a system directly from the manufacturer or from a retail store. Some companies—such as Apple, Dell, Hewlett-Packard (HP), and Lenovo—allow you to customize your system and order it online or over the phone to be shipped directly to you (mail order). Likewise, these same companies and others make their computers available at retail outlets such as the Apple Store, BestBuy, Costco, Office Depot, Staples and Walmart.

From the Manufacturer

Arguably, the greatest advantage to ordering a new computer directly from the manufacturer is that you are able to customize it to get exactly what you want. In addition, due to inventory practices, manufacturers are usually able to offer new technologies more quickly than retailers, who usually have to move their existing inventory of older technology before restocking with the new. However, ordering direct from the manufacturer can sometimes work against you, such as when a lack of critical components delays the delivery of your new system.

One of the biggest trade-offs when buying direct is the lack of face-to-face assistance should something go wrong. Dell offers a variety of computer setup and support services, either over the phone or via third-party technicians who come to your house. These include new computer setup for $149 (in-home only), Internet and email setup for $59 (phone) or $99 (in-home) and Windows operating system installation for $89 (phone) or $149 (in-home).

Furthermore, most manufacturers include in a system’s purchase price one year of on-site services as part of any warranty. These options should cover the majority of problems you typically might face—at least for the first year of owning your computer.

For repair service coverage after the manufacturer warranty expires, many larger mail-order companies offer extended warranty coverage through third parties. Realistically, there is no reason to pay for extended warranties lasting more than three years, as anything serious that happens at that point may warrant buying an entirely new system. HP and Dell both offer three-year protection plans that cost between $85 and $200+, depending on the level of service you choose and the type of system you purchase. Apple’s AppleCare Protection Plan provides three years of telephone technical support and repair coverage ranging from $149 to $249, depending on the system you buy.

Retail

Buying retail—either from an actual brick-and-mortar store or an online retailer—doesn’t necessarily mean paying more for a system that isn’t quite what you are looking for. Popular stores such as Best Buy, Office Depot and Walmart offer competitive prices compared to manufacturers, and online vendors and usually offer a large enough selection for you to find a system that closely matches your needs. These same stores allow you to buy from their websites, as do online retailers such as CircuitCity.com and TigerDirect.com.

You may have to be prepared to compromise on your list of wants, and perhaps your budget, to fit the retailer’s offerings. However, there are enough options that, if you “shop around,” you shouldn’t have a problem finding a computer system that matches your computing needs and budget.

System Recommendations

Table 2 summarizes our recommended specifications for those buying a desktop computer today to perform the most common types of investment analysis as well as general-purpose computing tasks for the next few years.

Given the rapid changes taking place in the computer industry, one certainty is that today’s top-of-the-line PC will be relegated to middle-of-the-pack status within a matter of months. Generally speaking, however, don’t be seduced by the latest technologies, as you are most likely paying for performance and options you don’t really need.

We realize that computing needs are as varied as investment styles. What we have attempted to do with this PC Buyer’s Guide is to provide our thoughts and opinions. Like investing itself, the ultimate decision of whether to buy, as well as what to buy, is up to you.

The next section provides more in-depth discussions and guidance on choosing the hardware components that make up your complete computer system.

Key PC Components

A computer is a collection of components that influence the overall performance of the PC and your overall computing experience. The pieces of a computer, or the hardware, include processor(s), hard drives, optical drives such as DVD-ROM drives, and video and sound cards. Knowing what each component does, and its relative impact on the performance of a computer, allows you to choose the best system for your budget.

Processors

The engine that drives any PC is the processor, or CPU, which executes operations, performs calculations, and coordinates the other hardware components. The processor is also the driving force behind the cost of any PC, as it tends to be the most expensive component.

Theoretically, the faster the processor—as measured by its clock speed—the more quickly the computer will function. However, certain processor chip designs can squeeze more power out of a lower-speed chip than they can out of a chip with a higher clock speed. In addition, the hardware setup of your PC can also impact its performance beyond the processor. For example, the amount of memory or RAM in a PC can have a more tangible impact on a computer’s performance than the processor.

Historically, processor manufacturers were able to increase the speed and power of a processor by increasing the number of transistors on the chip die. Eventually, however, chip makers ran into the physical limitations of adding more transistors to a single chip. As a result, the norm has become “multi-core” processors. Today, dual-core processors consist of two independent microprocessors (cores); quad-core processors consist of four cores, and so forth.

You cannot assume, however, that there is a linear relationship between the number of cores a processor has and the computer’s overall processing speed. A dual-core chip is not twice as powerful as a single-core processor. However, multi-core processors allow for more efficient processing, depending on the tasks you are performing with your computer.

Most new computer buyers don’t need the fastest processor or the one with the greatest number of cores. To save money without sacrificing performance, you may wish to consider a system with a processor that is one or two generations behind the newest ones.

Most consumer desktop systems on the market today have dual-core systems, with quad-core becoming more common. The typical PC buyer will currently be choosing among Intel’s Pentium and Core i3 (dual-core), Core i5 (dual- and quad-core) and Core i7 (quad-core or six-core), and AMD’s Athlon II X2 (dual-core) and Athlon II X4 and Phenom II (quad-core).

On the laptop side, you will generally find Intel’s Pentium and Core i3 (dual-core) and Core i5 (dual- and quad-core) and AMD’s Athlon II X2, Phenom II and Turion II (dual-core) processors in mainstream systems on the market today.

Data Storage

Over the years, operating systems have become more complex and powerful, and software makers have designed products to exploit the latest technology, all of which requires greater amounts of hard disk space. Also, more and more users are getting involved in digital photography, video and music. This, too, requires an immense of amount of hard disk space—both internal and external—to store all of this data and provide room for expansion over time. This section discusses key hardware devoted to data storage.

Memory

Computers have two types of memory—temporary and permanent. Any data saved in temporary memory is lost when you shut the computer down. The most common type of temporary memory in a computer is RAM, or random access memory. RAM is the primary storage for a computer processor—it is the working area used for loading, displaying and manipulating applications and data. Therefore, the amount of RAM your system has impacts several aspects of the computing experience—most importantly, the types and number of software programs you can run simultaneously at an acceptable rate.

Even with a top-of-the-line processor, a lack of physical memory can have a significant negative impact on the performance of the PC. Furthermore, applications that are always running in the background, such as anti-virus software, can quickly use up a system’s memory (as well as processor) resources. Therefore, if you are on a tight budget, you are better off going with a somewhat less-powerful processor in favor of additional memory.

You may also find memory modules that operate at different speeds. While, like a faster processor, faster memory is better, it is unlikely that you will notice the difference. Therefore, you can save money by choosing the slower-speed memory, if you have the option.

It is relatively easy to add more physical memory to your system, if needed. However, it is probably worth it to pay for as much memory as you can afford up front to avoid having to add more in the future.

The typical mainstream PC now ships with between 4G and 8G of memory. You need to have a 64-bit operating system to utilize that much memory (see the sidebar “32-Bit Versus 64-Bit” for an explanation). Given the low cost of memory, we recommend no less than 4G if you are running a 64-bit operating system. However, if you plan on performing a lot of high-definition video editing, you may want to consider more memory.

Adding another gigabyte of memory when customizing a new system will probably cost you less than $20, while adding two extra gigabytes of memory should cost less than $50.

Internal Hard Drives

While temporary memory, as we have discussed, plays a vital role in the operation of a PC, it is equally important to have the capacity to store data for future use. This is where permanent storage comes into play, which allows you to retain data even after you shut down the PC. The primary type of permanent storage in personal computers is the internal hard drive.

Hard Disk Drive (HDD) Versus Solid State Disk (SSD)

Over the last few years, solid state drives (SSDs) have gained in popularity, especially for portable systems. Just like traditional hard disk drives (HDDs), SSDs allow you to save data, images and music. Where they differ is in the execution. Solid state drives store data on memory chips, whereas HDDs write data to and read from spinning platters. Simply put, a solid state drive is a much larger version of the flash drive you may have in your digital camera or the thumb drive you use to transfer files between computers.

SSDs have three advantages over HDDs: speed, power and longevity. Traditional hard drives, no matter how fast they are, still have to move their read heads over the platters—envision a needle on a record. Solid state drives, in contrast, have no moving parts. This allows them to read and write data at much higher speeds.

Also, since there are no moving parts, SSDs use less power and produce less heat than a traditional hard disk drive. This means it doesn’t draw down a laptop battery as quickly as an HDD, which is why you tend to find solid state drives in portable systems.

Lastly, the lack of moving parts significantly lowers the likelihood of mechanical failure with a solid state drive.

However, these benefits carry with them a pretty steep price premium that still places SSDs out of the realm of the mainstream user. Whereas a 128G internal solid state drive generally costs between $250 and $300, one terabyte (1T, or 1,024 gigabytes) internal hard drives for less than $80 are plentiful. Given the significant price premium of SSDs over HDDs, we still recommend buying a system with a hard disk drive for “typical” computing functions.

Hard Disk Drive Considerations

The most important factor to consider when selecting an internal hard disk drive is its size, or storage capacity. The explosion of digital media has placed greater emphasis on the need for adequate storage capacity. Digital photos, music and video can take up a large amount of your hard drive very quickly.

Budget desktop systems today typically offer at least 250G of hard disk capacity, but we recommend you go higher if you can afford it. Many mainstream desktop systems today ship with hard drives between 500G and 1T in size; unless you have no interest in digital photos or music, we recommend a minimum of 500G in hard disk capacity.

Notebook systems tend to have smaller internal hard drives. This is especially true for “value” notebook computers, which can ship with hard drives as small as 120G. Most mid-range notebooks offer hard drives that are at least 300G in size, while higher-end notebooks can offer as much as 750G of hard disk space.

Beyond size, a secondary consideration for internal hard drives is the speed at which they spin. The faster the drive rotates, the faster it is able to read and write data. While not a major concern for casual computer users, those who are into gaming and other multimedia applications will want to pay attention to drive speeds.

The majority of hard drives in desktop systems spin at 7,200rpm (rotations per minute), although you may find 10,000rpm or even 15,000rpm drives in high-performance systems (however, these high-speed drives generally have somewhat limited storage capacities). Many laptop hard drives spin at a slower 5,400rpm to conserve power and generate less heat.

Optical Drives: CD, DVD, & Blu-ray

Another type of data storage device is the optical drive, which uses lasers to read data from and write data to optical disks such as CDs and DVDs. It is virtually impossible to find a PC without an optical drive, and rewriteable DVD drives are now the norm for PCs.

DVD, which stands for digital versatile disc, is the preferred optical drive on the market today. DVD drives can now read all types of CDs—standard music CDs, CD-Rs and CD-RWs. The applications for DVDs on desktop systems are limited mainly to storage, unless the computer is a media center offering a cinematic viewing experience for DVD movies. However, many users like the ability to view DVD movies on a laptop while traveling.

Recordable and rewriteable DVDs offer impressive storage capacities of up to 4.7G for single-layer (SL) single-sided discs and up to 8.5G for dual-layer (DL) single-sided discs, or 9.4G for single-layer double-sided discs and 17G for dual-layer double-sided discs.

With recordable DVDs, there are two competing standards: DVD-RW and DVD+RW. DVD+RW drives cannot write to a DVD-RW disc and vice versa. However, with the advent of multi-format drives, which can read and write to both DVD+RW and DVD-RW discs, this is no longer an issue. Therefore, we strongly recommend purchasing a multi-format DVD±R/RW drive if you are planning to write or burn DVD discs. The majority of internal drives such as these cost less than $30. Furthermore, standard DVD-R and DVD+R discs, purchased in bulk, can cost between $0.20 and $0.30 apiece.

Blu-ray, the next generation of DVD devices, is a high-definition (HD) format that can store roughly three-and-a-half times more data on a disc—50G can be stored on a two-layer Blu-ray disc. This makes the Blu-ray drive a good choice for those looking to back up a large number of files—such as documents, photos or music—to a disc.

Combination Blu-ray readers/ DVD±R/RW burners are now available for between $60 and $120. Blu-ray DVD burners, on average, cost between $80 and $140.

However, unless you want to take advantage of the higher-storage capacity of Blu-ray or play Blu-ray discs (perhaps more of a consideration if you are looking for a laptop), we don’t see any compelling reason to spend the extra money for these drives.

External Storage Devices

All of the hardware components we have discussed thus far have been internal in nature—meaning they reside within the case of the PC. However, in this age of portability, many PC users do not want their data “tied down,” so they are making use of portable storage media—such as external hard drives and flash memory devices—that they can connect to their systems via a variety of port types.

USB Versus FireWire Versus Thunderbolt

Universal Serial Bus (USB) is a high-speed method for connecting all sorts of peripherals to a PC, such as mice, keyboards, printers, external hard drives and CD/DVD drives, and compact flash drives.

In November 2008 the USB 3.0 “SuperSpeed” specification was completed. The major new feature is improved data transfer rates, with maximum throughput of 4.8Gbps (gigabits per second), several times faster than USB 2.0. No matter what type of system you purchase, make sure it has several USB 2.0/3.0 connectors, including some on the front of the case for easy access.

USB’s high-speed competitor, which Apple developed, is IEEE-1394, or FireWire. While FireWire offers significantly higher data transfer speeds—up to 3.2Gbps for FireWire 800, versus up to 480Mbps (megabits per second) for USB 2.0—it has failed to achieve the same mass-market appeal as USB 2.0. Therefore, most peripherals, including external hard drives, use USB 2.0 connectors.

However, FireWire is the preferred method of connecting digital-video-related electronics such as digital camcorders. Therefore, if you intend to do video editing on your PC, we suggest getting a system with a FireWire card, which will cost less than $50.

In February of this year, Apple introduced a new connection interface with its updated Macbook Pro lineup, Thunderbolt. Designed in conjunction with Intel, Thunderbolt supports throughput of 10.0Gbps. In addition, you can daisy-chain up to seven devices from a single Thunderbolt port. Currently, the available Thunderbolt-ready devices include the Apple Thunderbolt Display as well as a few external hard drives and video capture devices.

Flash Memory Devices

For secure and highly portable data transfer and storage, there are a number of flash memory devices available today. Unlike an internal or external hard disk drive, flash-based devices store data on a chip instead of writing data to and reading it from a “platter.” The lack of moving parts makes flash memory much more durable. In addition, flash memory devices require very little power to operate, so they do not require their own power source.

Flash media cards have long been the removable media choice for digital cameras, handheld devices such as personal digital assistants (PDAs), and the like. Flash technology also has been integrated with a USB interface to arrive at USB flash drives, which are small enough to fit on a keychain yet offer storage capacity far greater than that of CDs or even DVDs. An 8G USB flash drive, on average, costs under $25.

Ultraportable Hard Drives

Just like their internal cousins, the capacities of external hard drives continue to climb, with capacities in excess of one terabyte (1T; one trillion bytes, or 1,024G). Such large amounts of storage are also available in relatively small packages in the form of external 2.5” drives. A 500G external 2.5” drive, on average, costs no more than $80.

The price per megabyte for these drives is only a fraction of the cost of flash memory. A Western Digital 500G My Passport Essential external hard drive, which supports both USB 2.0 and USB 3.0, is currently available for $80, or $0.00016 per megabyte, from TigerDirect.com. By means of comparison, an 8G Sandisk Cruzer USB flash drive costing $15 at Walmart has a per-megabyte cost that is more than 1,000% that of the Western Digital My Passport Essential external drive.

Video & Sound

These days, computers are as much personal entertainment systems as tools. Some PCs allow you to watch and record TV programs. Even if your multimedia desires aren’t that ambitious, chances are at some point you will still listen to audio clips or music or watch video clips or movies with your computer.

Depending on how much multimedia usage you intend for your PC, you will want to be sure to buy audio and video capabilities to match.

Video

Earlier we discussed the CPU, which controls much of what goes on with the PC. However, computers also have a GPU, or graphics processing unit; these chips create the images you see on the display.

Most mid- and high-end desktop systems today have dedicated or discrete video memory that offers better graphics capability compared to “integrated” video memory. Some value desktop systems and many notebook systems still have integrated video memory, where the system uses the primary memory for video and other operations. When looking at a system, inquire as to whether memory is dedicated specifically to the video system or whether the video memory is integrated with the main memory.

If you plan to use your new PC for gaming, graphics, high-definition video or Blu-ray disc viewing, or other serious multimedia applications, a dedicated graphics card is a must. Upgrading a desktop PC from integrated graphics to a 256M dedicated video card usually costs under $50. For laptops, depending on the line you are looking to buy, you may not have the option to upgrade from integrated graphics to a dedicated video card. When such upgrades are available for the laptop, the cost is usually under $100.

Audio

The vast majority of new systems today come equipped for stereo sound, although you have options that will affect the overall sound quality. Some desktop systems and many notebooks have integrated audio, which should suffice for listening to MP3s and CDs or performing general computing tasks. However, if you are looking for enhanced audio, you may have the option to upgrade either to software-enhanced audio or to a dedicated sound card.

Software-enhanced sound, which typically costs around $25, is a step up from basic integrated audio. Furthermore, it is usually the only internal audio upgrade available for notebook systems.

If you want the highest quality sound, especially for watching video or recording audio, hardware-driven sound is the best option. This requires a dedicated sound card, which is typically an option only for desktop systems. An upgrade to a dedicated sound card direct from the manufacturer will cost under $100.

Displays

While the computer itself does the heavy lifting as far as running software and performing calculations, the monitor is equally vital, since it allows you to view the fruits of your PC’s labors.

When shopping for a new desktop system, be sure that the quote you receive includes the cost of a display; some companies quoting “low” prices for new computers may be selling them without a monitor. As you compare prices of new systems, do not look to the monitor as an area where you can save a lot of money. The increased viewing area and clarity of a larger display will be well worth the reduced eyestrain through the years.

LCD

LCD (liquid crystal display) is now the norm for both desktop and laptop/notebook systems. However, manufacturers including Apple, Dell, HP, Lenovo and Toshiba have been adding LED (light-emitting diode) displays to their product lines and adding LED-backlit displays to their laptop lines.

While LED does not change the overall viewing experience, it does allow for much thinner systems overall compared to traditional LCDs, and LED displays consume less power—two definite benefits for portable systems.

Screen Size

Almost all new consumer desktop systems today offer widescreen displays that are at least 19” in size, with upgrade options up to 24” not uncommon. At the manufacturer level, upgrading from a 18.5” to a 21.5” LCD is around $120. We recommend this, especially if you plan to use your PC for extended periods,

For laptop users, there is a trade-off between screen size and portability. Today’s ultraportable notebook systems, which weigh less than five pounds, have screen sizes that average around 13” or 14”.

Desktop replacement notebook systems with screen sizes ranging from 17” to 20” often weigh over seven pounds, an important consideration if you plan to travel with such a system.

Resolution

A display’s resolution is the number of pixels that make up the actual viewing area. LCD displays have what is called a “native resolution”—generally the highest resolution that it can best display. Again, a 22” display with a 1920 × 1080 (full HD) resolution is a worthwhile investment, especially if you plan to use your system for gaming or for watching movies.

The cost of such a display, on average, is currently between $130 and $300.

Internet Connectivity

Nowadays, very few people use a home computer without accessing the Internet. There are several on-ramps to the information superhighway: dial-up modems or high-speed connections such as DSL, cable, or satellite.

Dial-Up Connection

Those of us with high-speed Internet connections tend to take them for granted. However, a number of people live in areas where connecting to the Internet with a traditional dial-up modem (using a land telephone line) is the only option.

Depending on where you live, there may not be providers of high-speed Internet such as DSL/ADSL and cable. Even if satellite Internet is available, for many the costs are too high. If you fall into one of these categories, you will need to have a system with a built-in modem. However, you cannot assume that a standard modem is included with a new PC. Adding a 56.6Kbps internal modem—which isn’t always an option—costs less than $20. An external USB modem can also be purchased for $15 and $50.

High-Speed Internet

High-speed or “broadband” connections offer data transfer speeds that are vastly superior to dial-up but, again, their availability is tied to where you live. Ranked in descending order based on data transfer speeds are fiber-optic, cable, DSL/ADSL, and satellite.

In order to access the Internet using either a cable or DSL/ADSL modem (or if you are considering networking multiple computers at home), you will need a PC with a built-in Gigabit network adapter. On average, a five-port 10/100/1000 (1000BASE-X) Gigabit network adapter costs under $30.

Wireless

Wi-Fi technology offers wireless high-speed access to the Internet using Wi-Fi–enabled devices such as PCs, cell phones or personal digital assistants (PDAs). Wireless access points, or hotspots, have sprung up in almost every place imaginable over the last several years, from coffee shops to hotels and airports. If you are planning to buy a new laptop, make sure it has a built-in wireless network card so you can make use of these hotspots.

Cellular phone companies—including Verizon, AT&T and Sprint—are also entering the high-speed Internet market by offering Internet access over their cellular networks (where they are available). Some laptop makers offer built-in mobile broadband adapters. Please note, however, that these services require a wireless subscription, similar to a cellular phone plan.

For those with broadband Internet connections at home, you can also set up a wireless network and use Wi-Fi to connect to it. In order to have wireless at home, you need broadband Internet access, such as DSL/ADSL or cable, a wireless router to connect to your cable or DSL/ADSL modem, and a wireless card for your PC.

Printers

While not technically part of the computer itself, printers, like monitors, play an important role and should be considered a part of a complete PC system. It is highly unlikely that you can use a computer for any length of time without having to print something, whether it is an email message, a Web page, a digital picture, or a price chart. Printers, like computers, come with numerous options and issues to consider and have varying price points. Keep in mind that the quoted price for a computer system rarely includes a printer. This is usually something you need to purchase separately.

Resolution

When looking at printers, print resolution, reported as dots per inch (dpi), is an oft-quoted statistic. The higher the resolution—all else being equal—the better the image quality. However, resolution is not as important as it once was, as manufacturers have found ways to manipulate resolution without actually increasing the number of dots per inch.

Inkjet Printers

Inkjet printers are the most common printers on the market today for the average PC user. They are inexpensive, reasonably fast and quiet, and they achieve good print quality.

If you are spending the money for a printer, color is the way to go. This is especially important if you want to distinguish between data on printed graphs with multiple lines or bars—often a concern when printing reports from investment software and information from the Internet.

You can find color inkjet printers that cost as little as $30, but remember that “you get what you pay for.” For standard color printing, expect to pay between $50 and $150 for a good-quality color inkjet printer.

Over the life of a typical inkjet printer, the greatest cost will be ink. Sometimes, printers that are more expensive are actually less costly to run in the long term because they often have higher-capacity ink tanks and separate tanks for each color (instead of multi-color ink cartridges). Looking at the page yield of a printer’s ink cartridge(s)—how many pages a cartridge can print before running dry—will give you an idea of how costly a printer is to operate.

Laser Printers

Compared to inkjet printers, laser printers offer superior printing speed and quality. The prices of laser printers have fallen to the point where, depending on your needs, a personal laser printer may be an option.

Personal monochrome (black and white) laser printers start at around $100, while personal color laser printers tend to run between $150 and $500.


Discussion

Robert from CA posted over 3 years ago:

I see NAS RAID storage to be essential for avoiding inevitable disc failures. I believe that the need for impartial expert advice in this area is particularly acute, because the availability of these devices priced, configured and built for the consumer market is new.

Can you recommend a source for such advice?

BobW.


Robert & lavonn from ID posted over 3 years ago:

Very well done as in the past, even better as you had more room for details.

I have a LG monitor I bought some time ago with the ability to have it in either landscape or portrait orientation. I find this very useful. Most of the time it is in portrait for emails and such, and I can see a full page of text without scrolling. When creating a spreadsheet, or some photo uses, I can again get full page without scrolling.

I only hope these features will continue in the future when either I upgrade to where I want more resolution or this monitor comes to the end of its "life."


George from PA posted over 3 years ago:

A serious ommission in this guide (to my way of thinking) is Data Security. While this is (or should be) a concern of every computer user, it is especially true for those managing finances through a computer.

That is: data is lost or stolen everyday and the problem is increasing rather than decreasing. And, computer vendors (especially hardware vendors) feed this problem in order to save money.

In terms of losing your data (be it family pictures or fianncial data -- including IDs, Passwords and account numbers) ALWAYS backup your data. For $75 you can buy an external harddrive and setup Windows to back up your data every week or even every day. You can also use online backup sites -- but I am leary of storing confidential finacial information on somebody else's computer. Not only can they lose it, their site's can be hacked just like so many others have been. You can also backup your data to flashdrives and other external media -- but that may not be as secure as an external harddrive. But, it is best to back it up to at least 2 places.

In terms of having your data stolen: no system is fool proof. If they want your data badly enough, they will get it. But you can make it harder for them. First, run a top of line comprehensive Firewall / Anti-Spyware / Anti-Virus program. And, if you can, use a separate computer for your financial transactions than you use for general use such as email and web browsing. That is, as you kid browses that online game site, they could be installing programs to steal your personal information.

You are better off with an older computer where your data is secured than a brand new one. In fact, as PC manufacturers compete more and more on price -- often the older computer may be more reliable. But, as I said, ALWAYS backup your information to an external device (or two!)

Most people dismiss the idea of data protection and mostly focus on the software or hardware. But while those can be replaced for a few dollars, your confidential and valuable information cannot. Once it is lost or stolen it is gone.

Spend your time and money on the things that will protect you and your information rather than going for the latest and greatest.


Alan from FL posted over 2 years ago:

I enjoyed the article overall and learned a few things from it. In the Monitor section I would have added some lines on the non-advantage of the current crop of 16x9 aspect ratio monitors available in stores and the great variety of 4x3 aspect ratio monitors available from on line retailers. This is mainly an issue for multi-monitor users who want maximum use of their desk space.

I still have a lot of unanswered questions about graphic cards. I run with six monitors. I have multiple windows of streaming quotes from two different brokers plus a streaming video feed of CNBC. I have one PCI Express x16 graphic card plus two older PCI graphic cards with 256 MB RAM each. The data feeds on individual stocks stop feeding from time to time and my video feed will stutter several times an hour. I am using an Intel duel core 4500 with 2 Gigs of RAM and Windows Vista. Where do I spend my money? Do I buy graphic cards with more RAM, upgrade my motherboard to get 3 PCI Expess slots, faster CPU and or upgrade to Windows 7 and use more motherboard RAM? In your next edition a discussion of these factors would be helpful for multi-monitor users trying to get improved performance without wasting money. I might add that anyone spending several hours a day at a computer trading stocks and not using multiple monitors is missing a great experience.


Merrell Young from OH posted over 2 years ago:

I would like to communicate with other retirees who utilize AAII & Schwab's SSE (Street Smart Edge).

Until I discover a better venue to use for communicating with a group of like minded souls, I can be found at Facebook under Merrell Young.



























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