LEE GOMES, The Wall Street Journal, reports:

Dell — which wasn’t even the first PC maker to take the step — last week was offering for $299 a Windows computer that had most of what a beginning user would want. That list includes a 17-inch monitor, a 2.4 gigahertz Celeron processor, 256 megabytes of RAM and a 40-gigabyte hard drive.

A nearly identical system a year ago cost $499, and while it had only half as much RAM, it did provide speakers. The newer, cheaper model doesn’t have any, but you can add a pair for $20.

Besides reflecting a remarkable price decline of 40% in 12 months, the fact that computers can now be had for less than $300 means they have officially entered into the territory of “consumer electronics,” at least under one set of industry rules.

Ten or so years ago, when PCs cost five or even 10 times what they do now, it was common for analysts to say that they would never become a staple in homes until they were priced the way consumer electronics were, usually defined as costing less than $300. In the days when PCs were $2,000 and even more, that target seemed to be something of a fantasy.

Now, PCs cost less than some telephones — and less than a lot of TV sets — and can be found in roughly three-quarters of U.S. homes. But while they are priced like consumer electronics, the machines still aren’t even remotely as easy to use, and the trend lines there aren’t particularly encouraging. In fact, with price no longer as significant an issue, the continuing complexity of computers may become the biggest contributor to any “digital divide” between digital haves and have-nots, especially involving access to the Internet.

Declining PC prices have become the poster child for the free-lunch economics of the modern technology industry, where manufacturing efficiencies, especially in semiconductors, allow companies to continually sell more for less. This is most noticeable in hardware, but it is occurring as well in technology-related services — at least when there is something resembling effective competition.

Consider the price-busting nature of the tussle between cable-TV and phone companies to provide all of a household’s digital services. SBC Communications just cut the monthly price for basic DSL service for new users to $15; it was $27 this time last year. (Cable TV viewers, though, have yet to benefit; many Comcast bills have actually gone up in the past year.)

Some hardware prices appear to be dropping before our very eyes; the best current example involves big flat-panel TV sets. For example, Costco Wholesale, the big-box discounter, is offering a 30-inch Sceptre LCD system for less than $1,000, a 50% decline in just a few months.

There are noteworthy exceptions to this trend of falling prices. One of them is ink, at least the heavily branded sort. A year ago, it cost $65 to buy the two cartridges needed for my H-P 960c ink-jet printer, and that’s precisely what they cost today. Ink prices are such that Hewlett-Packard now sells an entry-level printer — the 3740 — that, at $34.99, costs the same amount as some ink cartridges. Can a disposable printer be far behind?

Another example, of course, is software. Microsoft, for one, seems to be in no particular hurry to cut the price of Windows. Ten years ago, an upgrade version of Windows 95, then fresh from the labs in Redmond, Wash., was being sold in most stores for $89.95. If you shop online for Windows XP Home, the third-generation successor to Windows 95, you’ll find it in the same ballpark.

Ditto with Microsoft Office, which includes Word, Excel and the like. The high-end version of Office 97, which was introduced eight years ago, went for $499; the most recent Office had the same price when it came out in 2003.

In still other areas, market dynamics are such that prices fall, though not at any sort of rate you would want to write home about. A year ago, for instance, a basic mobile phone plan from Verizon cost $39.95 and included 400 minutes of talk time. The price hasn’t changed, but the minutes have, increasing to 450. That’s a 12-month price drop of 12.5% per minute of talking, which, if it involved PCs, would be downright inflationary.

To answer the question at the top of the column: It’s anyone’s guess, at least as far as PCs go. A Dell spokesman notes that the cost of the components that make up a PC drop an average of half a percent a week. While that sounds impressive, the PC price decline of the last year marked an even greater decline.

A $300 PC once seemed entirely fanciful; so today is one costing $200, or $150. But that’s where all the trend lines are pointing. Dell, for one, has been strikingly profitable selling machines at prices the conventional wisdom once regarded as unsustainably low. The machine being discussed here, the Dimension 2400, began last week at $299. By Friday, it was already selling for $1 less.

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