According to new sales figures from NPD, the average selling price (ASP) of a new PC is $515.

When it comes to PCs, the cut-throat competition in the industry has resulted in a race to the bottom. The netbook segment was the final nail.

The PC vendors very much want to sell the higher margin machines but years of pushing price as the selling point has caused the consumer to think that’s the only distinguishing feature between vendors. Dell’s attempt at the premium market - the Adamo - has failed miserably. And thanks to those plummeting prices, Microsoft’s share of the pie is being squeezed very hard.

The state of the PC industry was driven home sharply with the rest of the NPD report. The ASP of Macs was $1400. Almost triple that of PCs. And the most jaw-dropping figure? Apple has a 91% market share in computers sold over $1000. That’s up from 66% last year. Apple has stolen the entire premium market from the PC vendors.

The question now is whether this situation is sustainable. Apple has positioned PCs as the frumpy, el-cheapo, problem-filled cousin to the sleek, sophisticated Mac. And the vendors (including Microsoft) have spent millions in advertising dollars rushing to agree with them. The Microsoft laptop hunter ads reinforce the point by focusing on one single area - price. As if nothing else about PCs matter.

I’m certainly showing my ignorance of marketing here, but if I were Microsoft I’d be running a campaign based on the people and companies that rely solely on PCs. “When you want to serve a million web pages in an hour, you need a PC. When you want to design a building using cutting-edge CAD software, you need a PC. When you want to program your sewing machine, you need a PC.” Not, we sell the cheapest crap you can find. And not, I’m a PC and I’m a person.

This cannot possibly be healthy for the PC industry. I’m certainly a fan of Mac hardware but without strong competition there’s no incentive for improvement. And with margins razor thin there’s no money to invest in innovation.