August 27, 1999, 06:48 p.m. - No-frills PC in the works at Compaq
By DWIGHT SILVERMAN
Copyright 1999 Houston Chronicle
Compaq Computer Corp. is developing a line of simplified PCs
that could cost about half as much as standard business
computers, a company executive said.
Mike Winkler, senior vice president for Compaq's personal
computer group, said these business products -- dubbed office
appliances -- could be released at the same time as the next
version of Microsoft's Windows NT operating system,
Windows 2000.
Although conceding that a market for office appliances
"doesn't exist yet," Winkler said in an interview Thursday that
the release of Windows 2000 and its new capabilities would
change that.
"They would be considerably simplified and smaller -- a better
industrially designed PC," he said. "They would not
necessarily be burdened with the legacy slots and bays, and
thus would be free of the size and power requirements that go
with that."
Winkler said the devices would be among several products
Compaq plans to introduce when Windows 2000 is released.
Microsoft Chairman Bill Gates said at a conference sponsored
by Dell Computer Corp. in Austin this week that Windows
2000 was nearing completion and "probably" would be
available early next year.
Small, inexpensive and easy-to-manage business computers
have been a Holy Grail in the computer industry for several
years. The most recent stab at it -- the so-called network
terminal -- fizzled.
Winkler said the falling cost of components in full-powered
PCs, combined with improvements in Windows' ability to
manage large numbers of PCs across a network, will create
an opportunity for companies like Compaq to kick-start this
market.
"We should be able to make these things for close to half the
price" of standard business PCs, Winkler said, adding that
could be in the $500 range.
Plummeting prices have hurt PC companies in the consumer
market, where a majority of systems sold cost less than
$1,000.
Winkler said that has not happened as dramatically in the
business market, but it will, "and we'll be driving that with
these devices."
Winkler also said that Compaq has been surprised by the
success of its new Armada M300 three-pound ultraportable
notebook computer. In fact, the company is scrambling to
meet demand, particularly for active matrix screens, which are
in short supply.
"Analysts told us the market for thin-and-light portables was
about 10 percent," he said. "But we've been selling about
twice as many as we forecast."
Tim Bajarin, an analyst with Creative Strategies of Campbell,
Calif., said he had warned Compaq that demand would be
closer to 15 to 20 percent of the market.
"You have a bunch of road warriors out there who are starting
to rebel against six- and seven-pound portables," Bajarin said.
"They're sick and tired of carrying the weight."
Winkler is now in charge of Compaq's core business --
desktop and portable computers, the part of the company
referred to internally as "Compaq classic." Analysts say it is
also the part of the company that has been most battered in
its near-legendary fight with Dell.
The most recent figures from International Data Corp., a
market research firm, show that Dell is on the verge of
overtaking Compaq as the top seller of U.S. desktops.
Winkler said he doesn't believe that Dell has stolen market
share from Compaq, "even though they are growing faster than
us."
"I think they are taking away from second-tier vendors," he
said, referring to smaller PC makers. "If you look at the
numbers, Compaq is still growing in market share."
William Conroy, an analyst in Houston with Sanders Morris
Mundy, agreed.
"I am not convinced that Dell's success has come at the
expense of Compaq," Conroy said. "If the company were truly
and severely wounded, you would already have seen it show
up in the numbers, and it's not. The numbers would not seem
to indicate that the market is running away from this
company."
Winkler said Compaq is suffering a loss of "mind share" -- the
way people think and feel about the company -- as compared
with Dell, which is considered the industry darling.
"We are naturally disadvantaged at this point because of the
turmoil at Compaq," he said.
Compaq reported a $184 million loss in the second quarter. In
April, its board ousted Chief Executive Eckhard Pfeiffer. A
slew of other executives left after that.
Winkler is one of the few members of the Pfeiffer team still in
place. Asked why he stayed through the turmoil, he laughed.
"That's funny, (Compaq Chairman) Ben Rosen asked me the
same question," Winkler said. "I told him, 'Ben, I will never
leave the company when it's down. If I leave, it will be on an up
note.' It's a point of pride."
Compaq closed Friday at 23 1/2, up . |
