questionscan you help me replace my ancient computer?

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What kind of games? Crysis 3 will give you one answer or Angry Birds will give you a totally different one.

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More interested in games like Skyrim, TF2, Portal than in games like Angry Birds.

On budget: If I had to guess, I'd guess I could lay down around $1500 at the most.

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Anything you buy today, even a netbook, is going to run circles around your current computer. As already suggested, if you want to run high-end games, you are going to need a more expensive machine. Chances are, though, your tastes run toward the less hardware intensive fare, since you have been making do with such an old machine. Figure out your price point and hardware style (desktop, laptop, etc.) and start shopping. You really can't go wrong with any of the name brands (though some will argue this pont). Woot (and other) refurb units generally give you good bang for the buck and I have seen some bargains at my local Fry's as well. Get a machine with at least Win7, and you might want to hold out for Win8, coming real soon.

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@kalira: At $1500 anything you buy will blow you away compared to what you are using. In that price range you can even play the high end games, though not at the highest frame rates.

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Don't get too caught up in buying cutting edge hardware for games. Most PC games these days are completely enjoyable on a $500-800 machine.

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I recommend going with a laptop, then pick up a larger screen to connect it to or just use your tv as a monitor when you want a larger picture. As for type, I've heard good things about asus (the computers, not their support) and dell. And I think best buy is running a deal on pre-ordering windows 8 ($15, I think) with any computer purchase. Personally, I use a macbook pro, but that doesn't seem to be what you're looking for.

Congrats on keeping your machine working for 10 years...that's quite an accomplishment.

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$1500 is definitely enough. However I would look at boutique shops rather than the name brands. Try iBuyPower, CyberPower, AVADirect, etc. Some of these can be found on Newegg.

For gaming you'll want to put more money into the graphics than the processor, and most name brands won't let you do that, but boutiques will let you customize a lot more.

As to what to look for:
4 GB of RAM is pretty standard these days and should be enough unless you're like me and have thirty tabs open. More is better of course
The CPU should score at least 5000 on this chart http://www.cpubenchmark.net/cpu_list.php
The Graphics card (GPU) should score at least 3000 on this chart http://www.videocardbenchmark.net/gpu_list.php
At least 500 GB disk space (modern games eat up a lot of space).

If you have money leftover that you want to spend then add in this order a solid state drive (SSD), better graphics, more memory, better CPU.

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If you're wanting to play games, definitely get a desktop. Much more bang for your buck that way.
Building your own would be the smartest way to go, but if you're not comfortable learning how to assemble a computer find one from a site like ibuypower or cyberpowerpc.

Edit: also I'd go for an Intel processor (one of the newest, Ivy Bridge ones like the Core i5-3570K) and an nVidia GPU (GTX 670 or a 570)

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I have a home built 6 core 3Ghz, 8GB mem, and AMD 6700 graphics and will play anything I throw at it. So use that as your base line. My 1 TB is approx half full with games and music. (don't do movies). For a ready built I would go with an Alienware Gamer and 32" 1080 TV for monitor and at least 2.1 50watt speakers. Happy gaming.

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@zvwang: The value for the iBuyPower and CyberPower machines are just awful. You're paying someone hundreds of dollars to make a shopping cart on Newegg and 45 minutes of labor.

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Definitely a desktop. I think most computer company websites will let you choose which components you want put in them and build them to your specs. YMMV..

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For $1500 you can order up a really nice laptop if you want. I am a big fan of ThinkPads myself; they used to be made by IBM but the name was sold to Lenovo and the build quality seems to be more or less the same. Check out their website, find something that is say in the $1100 - $1200 range and then hit the customize button. You can do quite a bit to up the power to get it where you want. I'm currently running a T series, though if portability is not a huge issue you may want to look at the W series instead.

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@shinespark: Yep, but there really isn't a better option if you're not comfortable assembling your own computer.

@lparsons42: He wants to game. A laptop is not for gaming.

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I say spend a couple hours doing research on how to build your own. It's really only 7-8 pieces that snap together. And it will allow you to get ANY setup exactly how you want it, and at the cheapest price.
http://www.tomshardware.com/reviews/build-your-own-pc,2601.html

Tomshardware.com is awesome. They've been doing unbiased reviews of computer hardware since the late 90's. VERY comprehensive. In the past few years, they've decided to end all the "what video card is best?" or "what processor should I get?" questions. They now do monthly revisions of "the best bang for the buck" where they bench test darn near every video card and processor available, then chart them out to make it easy to read the results. For example, here's the best video cards for the buck through June 2012.
http://www.tomshardware.com/reviews/gaming-graphics-card-review,3107.html
continued below

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They even do a quarterly builders contest where they construct an entire PC to be the best bang for the buck, and then bench test the heck out of them. So, actually, you could copy exactly one of those and ensure you're getting your money's worth. Here's the latest $1000 build.
http://www.tomshardware.com/reviews/overclock-radeon-hd-7970-core-i5,3210.html
From there, I'd buy a Solid State Drive (SSD) to add in and up the RAM to 8GB or even 16GB. That should put you around $1,300. Pick up a copy of Window 7 and you're good to go. (specials on Win7 pop up here on deals.woot from time to time)

Don't let building a PC intimidate you. It's really not difficult at all. I could have this together and loading the OS in a couple hours easily.

if you really don't want to do it, buy this and be done with it.
http://www.newegg.com/Product/Product.aspx?Item=N82E16883229341

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I just want to thank you all for your help. You've given me a lot to think about on this. I'll be sure to keep what all of you have said!

@stryker4526: He is actually a she... but that seems to be the only thing wrong with your assessment there :)

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@stryker4526: I disagree with the statement that "a laptop is not for gaming". It depends on what kind of games you want to play. There are plenty of powerful laptops out there that are not heinously expensive yet capable of playing the majority of the newest games. My laptop was under $1000 and came with a quad-core i5, 4gb of ram and discrete NVIDIA graphics.

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idk what you really want, but id go with the new vizio computers. Higher end, and look great.
http://www.vizio.com/computing

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@gojomoso: I checked out the Vizio website and agree the units look good. They apparently do not have any DVD or Blueray drives. They will be available mid July and their top I7 15.6" notebook is $1200 and 27" All-in-One is $1400. I'm thinking they could be improved upon with a media drive and a touchscreen.