Compaq Is Segmenting Home-Computer Market
March 28, 2011
In the largest effort yet to target different home-computer users, Compaq Computer Corp. rolled out five new consumer lines. The computers, many of which will be in stores before school starts this fall, range in price from $1,699 to $3,999, and in size from laptops to full-sized multimedia machines. ``Everything has been one-size-fits-all,'' says Ricki Mccool of market researcher International Data Corp. ``Compaq is segmenting the market.'' But in doing so, the huge Houston computer maker also is gambling that consumers aren't just looking for the lowest prices, but will pony up for fancy speakers, videophone capability and other bells and whistles. Many of the new machines are pricey for an industry that seems to be increasingly offering less expensive, scaled-down products. `Doodads Are Catchy' ``The doodads are catchy,'' says Barton Leininger, analyst at Smith Barney, but ``is there a BMW-Mercedes end of the market?'' He says he believes Compaq is hoping the new lines will help it rebuild its profit margins in an intensely price-competitive business. Consumer sales provided about 16% of Compaq's sales last year, but just about 5% of its profit. Michaele D. Grundy, Compaq senior vice president, says the company expects its heaviest sales to be at the low end of the range, computers with a retail price of less than $2,000. But he says the company's research found that many consumers who are purchasing their second and third computer want more options. Analysts say one solid seller is likely to be the Presario 8000 line, which Compaq bills as an ``ultimate multimedia machine.'' The sports car of computers offers premium speakers and sound, three-dimensional graphics and carries a price tag of $2,499 to $3,299. Sega Entertainment Inc. also said it will develop arcade-quality games for the machines by early next year. ``A lot of 35-year-old men are willing to spend'' for such features, Mr. Mccool says. Meeting a Demand? Less clear is the demand for Compaq's new Presario 3000 series, a flat-screen, ``minitower'' computer that should be easier to move from home to summer house or from room to room. Compaq says the sleek machine uses 40% less space than a regular PC and cuts cables with a cordless mouse, stored in a ``mouse house.'' But the machine weighs in at about 26 pounds and will start at $3,499, leading some analysts to wonder whether consumers wouldn't rather buy a couple of cheap PCs for different locations. In addition, the company introduced a notebook computer for the home, with speakers, Disc and built-in telephone-answering machine, and prices ranging from $2,499 to $3,999. Compaq, which trails the low-price Packard Bell Electronics Inc. in the consumer market, also upgraded its standard home PC, now called Presario 4000, and its home-office model, called the Presario 6000, with a range of fast processors and large disk drives packaged in newly designed taupe-gray boxes. ``We believe this is the most complete product line ever launched for home PCs,'' Compaq's Mr. Grundy said. All the new models also feature buttons intended to make computers more like other home electronics. One, for instance, will turn on the compact-disc player, another will retrieve phone messages and a third will put the computer to ``sleep'' to save energy. All the machines are ready for videophones, although the $200 cameras needed to make them work won't be available until the fourth quarter.
