Compaq Adds Color to Retail Revival

Brandweek, May 8, 2000 by Todd Wasserman

Eager to retain the No. 1 retail ranking it lost to rival Hewlett-Packard, Compaq is planning an iMac-inspired line of multicolor computers, a home networking product and an MP3 player for the back-to-school season, sources said last week.

Compaq hosted about 50 retailers and distributors late last month in Tucson, Ariz., to outline its plans for an increased retail focus. Executives at the Houston-based computer giant declined to comment on marketing plans.

Compaq's commitment to retail has been in doubt since investors put pressure on the company to beef up its lucrative services offerings instead of retail sales of PCs, which account for only 19% of revenues.

In June, Compaq plans to roll a line of PCs featuring color accent panels, which attach to change the color of the computers. Other PC makers have also carried the panels. HP offers them as an option in its build-to-order models.

The Compaq PCs will ship in a single color; buyers will get a coupon for additional panels. Compaq will not dabble in low-end price points--$399 and $499--with the line.

Compaq will also release a home networking solution, which sources said will be called Gateway (not to be confused with PC rival Gateway), designed to link multiple PCs within a household.

Despite its lack of success with its non-PC consumer product, the Aero (now the iPaq) handheld computer, Compaq is planning to release an MP3 player, pitting it against Sony, RCA, Samsung, Philips and other consumer electronics companies.

A retailer, however, described the device as small and sleek-looking, adding that it had a good chance of being a hit with consumers.