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Dell And Compaq Bank On The Need For Speed
Date: 12/7/98
Author: Nick Turner
Two personal computer heavyweights think high-speed modems will soon become a must- have item. Whether the buying public agrees is another matter.
Dell Computer Corp. last week announced plans to offer high- speed modems from 3Com Corp. in its PCs. Performance varies, but these modems can transmit data at roughly 25 times the rate of today's conventional 56-kilobit devices.
The move was the latest in ongoing campaigns by Dell and archrival Compaq Computer Corp. to bring speedy Internet access to consumers and small businesses.
''This stuff is ready for prime time,'' said Carl Everett, senior vice president of the personal systems group at Dell.
But the fast modems may take time to become attractive to consumers, analysts say. Services that take advantage of fast modems are available only in limited areas. On top of that, monthly charges are at least twice that of conventional Internet access.
It's likely that for now, PCs with built-in, high-speed modems will only be special-order items, analysts say.
''You're not going to see these PCs on retail shelves for a long time,'' said Van Baker, analyst at Dataquest Inc. in San Jose, Calif.
So-called ''broadband'' modems, which access the Internet either through cable or souped-up phone lines, have been around for years. The devices are just now being preinstalled in PCs.
Dell and Compaq are leading the charge. At the Comdex computer show last month, Compaq announced plans to build PCs with a high-speed modem developed with Lucent Technologies Inc. That same week, Dell countered with plans to install broadband modems from Cisco Systems Inc. into the company's PCs.
Both modems use digital subscriber line, or DSL, technology. Like conventional modems, the devices access the Internet through phone lines. Dell's other deal with 3Com, announced last Thursday, involves both DSL modems and cable modems.
Providers of DSL service, mainly phone companies, are duking it out with cable service firms to bring high-speed access to market. Analysts believe most households that adopt broadband Internet access will use cable. According to Forrester Research Inc., a research firm in Cambridge, Mass., cable service will represent 80% of the market in '02.
Forrester says subscribers of Internet cable services will grow from 350,000 in mid- '98 to more than 2 million by the end of '99. By '02, a quarter of all U.S. households online - 16 million homes - will use broadband connections, Forrester says.
Compaq hopes customers will embrace the technology more quickly. The company figures that by the end of '99, half its home- computer buyers can get high-speed Internet access.
Factory installation of the new modems is part of an effort by both Dell and Gateway to further customize PCs. Dell has thrived by selling PCs directly to customers, either over the phone or via the Internet.
Compaq has more recently begun selling over the Web. The company also has kiosks in retail stores that let customers configure and special-order PCs.
A build-to-order business model such as Dell's is key to selling PCs with high-speed modems, says Rick Edson, senior vice president of new business initiatives at 3Com. Dell can just look up a customer's zip code and quickly determine which broadband service is available in the area, Edson says.
But monthly fees may keep some consumers away. Dell customers can order DSL service from US West Inc. for $60 a month. Cable service is typically cheaper - around $40 a month. That's double the $20 for Internet access with standard modems.
Rates are likely to drop, but it may not matter much, Dell's Everett says. Even at the $40 rate, about 70% of customers are interested in adopting broadband service, he says.
The need for speed is strong, Everett says.
''This technology is going to be a major augmentation of the PC platform,'' he said.
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Metadata: DELL COMS CPQ LU CSCO USW I/3572 I/3574 I/4890 I/4811 E/IBD E/SN1 E/TECH |
