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Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: DownSouth who wrote (38917)	12/6/1998 6:54:00 PM
From: Elwood P. Dowd	Read Replies (1) \| Respond to of 97611

When it comes to PCs, we're not just cheap ... We're simple!!! By Zapman, CBS MarketWatch Last Update: 6:02 PM ET Dec 6, 1998 Letters to the editor (A.k.a. the whine rack.) GUALALA, Calif. (CBS.MW) -- A friend who makes his living as a writer and editor on the Wonderfully Wacky World Wide Web recently ZAPPED me with the news he doesn't own a computer. Never has. It's not that he has anything against technology. In fact, he's a whiz at telling me what's wrong with my PC. It's just that he's never HAD to buy one. His company provides him with a PC in the office and a laptop so that he can work at home when he could be spending time with Friends. Why should he go out and buy something he doesn't need that is going to lose half its value in the first year? Zapmother doesn't own one either. She says, "It's all so complicated!" She's just afraid of technology. She can whip up a complex six-course dinner for eight, but can't figure out how to set the clock on her VCR. Frankly, I have trouble with that myself. Companies like Apple (AAPL), Compaq (CPQ) and Dell (DELL) hate to hear about people like that. So do the big retailers like CompUSA (CPU) and Circuit City (CC). That's why they currently are advertising like crazy to get more people to buy their own computers. Their theory: Make it cheap enough, they will come. Alas, I think they're wrong. Just two years ago, you had to spend about $2,500 to buy a state of the art computer and printer. Zapman took the plunge at that level in February 97, returning home with a 200 megahertz Sony (SNE) with 32 megs of RAM, monitor and a dandy H-P (HWP) color printer. And I'm very satisfied. But being a typical American tight-wad, I didn't make that purchase lightly. My last computer before the Sony was a Radio Shack TRS80 Model III, circa 1981. Complete with the daisy wheel printer, it cost about $3,000. It became obsolete less than two years after I got it. It now sits in my garage, in mint condition, waiting to be formally designated as an antique. My geek friends tell me it should be in a museum. PCs are cheap now ... A few days ago, CompUSA was advertising a 300 megahertz Compaq with a faster modem than my Sony, 64 megs of RAM, a bigger hard drive, and a dandy Compaq printer. Price? $1010. Oh, and they were throwing in a 13-inch color TV that I would guess was worth at least $100. And they also noted you could get $180 back through rebates. So you figure the printer and computer themselves were really worth, oh, about $730. That's a better computer than I bought for less than a third of what I paid less than two years ago. Don't like Compaqs? You can get one of those green Apple iMacs for $1,300, including a TV. Or you can get an H-P computer with a 366 megahertz processor and an H-P printer -- with a TV -- for $1,380 after rebates. This isn't a plug for CompUSA. Circuit City and most other mass market retailers have very competitive deals. Circuit City will sell you a 333-megahertz Compaq for $900 after rebates, and that also comes with monitor, printer and a bunch of other stuff. Best Buy (BBY) has a complete 300-megahertz Packard-Bell (NIPNY) system for $800, and they throw in a scanner. You've gotta figure these computer makers will have to sell an awful lot of these this Christmas to make up for the big price cuts over the past two years. And there's a lot riding on their success. Right now, only 25 percent of U.S. homes own a computer hooked up to the Internet. If the cyber revolution is really going to take off, that number has got to get up above 50 in no time. If it doesn't, then those Web stocks are going to look hideously over-valued, computer makers will have to pull in their revenue predictions and the demand for PC components and software will look flatter than the water in a Gualala River delta dawn. ... but we're cheaper! Personally, I'd bet against the mass acceptance of PCs for two reasons. There first is there are a lot of people like my friend who have never owned a computer because they simply don't need to buy one. As computer prices come down, companies are probably going to give laptops or even home PCs to more and more of their workers in the hope of guilt-tripping them into working at home (Even Zapman is vulnerable to this perverse plot; I'm writing this at home on a sunny Sunday afternooon instead of soaking in the hot tub). The other reason is that, while computers have gotten a lot cheaper, they haven't gotten much easier to use. You still have to spend a lot of time setting parameters for your e-mail and figuring out how to sign up for an ISP (assuming the average new consumer even has a CLUE that stands for Internet Service Provider!). Even Apple's iMac requires some set up, and the other machines make you plug in a bunch of cords. Don't get me wrong. We're heading in the right direction. We're just not there yet. Computers won't become ubiquitous in U.S. homes until they are as cheap to buy as a TV, and just as easy to operate. At that point, maybe even my friend will buy a computer. And I might buy another. Maybe even one for Zapmother. But it will take more than cheap boxes. It will take a redesign of the PC into something that is much, MUCH simpler -- and cheaper still -- than today's machines. And I figure that's still at least a few years away.