This holiday season, the “low, low prices” sales pitch typically given by used-car emporiums may be heard in a less likely place: computer retailers. The price for a desktop could fall to as little as $99, predicts Current Analysis analyst Samir Bhavnani.

The price-slashing may come as sellers look for ways to peddle PCs to consumers, who may be considering postponing purchases until machines are loaded with Microsoft’s new Vista operating system, expected in January. The sales job will involve persuading buyers to get their machines dirt-cheap now and upgrade to Vista later.

“Prices are not yet at rock-bottom but we will see historically low prices on PCs starting on Black Friday [the day after the U.S. Thanksgiving holiday] and running through the first month of 2007 as retailers and manufacturers try to sell as many Windows XP systems as they can,” Mr. Bhavnani says.

If desktops manage to go for as little as $99, that would be a dollar less than the $100 PC for poor children being sold as part of a nonprofit social program by the Massachusetts Institute of Technology (MIT). But while such bargains could drive up makers’ market share, it doesn’t make sense earnings-wise.

After all, sales margins on computers are already razor-thin. For example, according to iSuppli analyst Andrew Rassweiler, earlier this year a Dell Inspiron 1200 entry-level laptop cost $437 to make but retailed starting at $499—giving it a profit margin of 12.4 percent. And that doesn’t even take marketing costs into account.

Neither Dell nor archrival Hewlett-Packard—which recently beat Dell by a hair to become the world’s No. 1 PC vendor—has plans for fire sales on their web sites. Instead, the companies are touting what they say are their usual low prices. Dell has a Vista-capable Dimension desktop starting at $329. With rebates, HP’s Vista-ready Compaq notebooks start at $399. Both offer Vista upgrade software as part of their sales packages, however—indicating they’re keenly aware that the waiting-for-Vista issue could keep wallets from opening right now.

It’s possible that if a $99 PC materializes, it could be a gimmick. Mass electronics retailers, such as Best Buy and Wal-Mart, could use the price to lure customers into buying pre-Vista computers. Dell spokesperson Mike Maher notes that at a retailer, certain extra charges like “handling” could add up, making a computer cost a few hundred dollars out the door.

Meanwhile, HP spokesperson Ann Finnie says that it’s not up to HP to determine final prices at outside retailers, so she can’t say for sure where prices for HP PCs will be before the season is over. But if analyst predictions are any guide, they’re likely to be lower.

Contact the writer: ECubarrubia@RedHerring.com