More bang for buck in 1998 entry-level PCs

Television Digest with Consumer Electronics, Jan 5, 1998

New PCs were heralded by blow-out sales in last week of year, with Compaq Presario 2200 leading dive at $699 with monitor, HP Pavilion 3100 selling $200 below $999 list, even DVD-ROM hitting $1,599 in IBM Aptiva 3CD with Intel Pentium MMX 233 MHz chip, 15[inches] monitor. Field was confettied with 166 MHz powerplant remainders trod by fallout from Toshiba meltdown (TVD Dec 1 p20) as high-end Infinias closed out at entry-level prices.

When competition resumes, ante will be 200 MHz Pentium MMX chip and equivalents at $799, with raise to 233 MHz processor in $999 PCs. Compaq and HP are expected to open action this week at $799 for PCs using 200 MHz AMD-K6 and Intel Pentium, respectively, with Compaq and IBM then facing off at $999 with AMD 233 MHz models, HP at $1,099 with Intel chip. Park separates at $1,799, though, with Compaq introducing DVD-ROM drive in minitower with Intel Pentium II 266 MHz processor.

IBM, latecomer to 3-digit market, will offer $999 Aptiva E26 with 4 open bays for add-ons. E-series graduates to 266 MHz IBM-made K6 chip in $1,500 Aptiva E46 with same room for growth. Company put emphasis on expandability and upgradability of PCs when introducing Aptiva E "value" line (TVD Nov 10 p15), making direct comparison to price-leader Compaq.

Now Compaq has abandoned sealed-box concept of "simply interactive PC" (SIPC) - Microsoft-inspired initiative to reduce cost and complexity of PCs by outboarding upgrades, rather than making customers get under hood to add boards or drives internally (TVD April 14 p17). With 2 slots and one bay open, new Presario 2240 desktop is larger that original VCR-size series, and replaces latter's black CE-styling for ivory cabinet. Also gone, for time being, is Cyrix MediaGX powerplant that made debut in Presario series, replaced in $799 PC by 200 MHz AMD-K6 chip. Compaq executives told us that switch was made for competitive reasons, claiming that AMD processor combined with additional cache memory would outperform other PCs at sub-$1,000 price.

DVD-ROM, Dolby Digital surround and 3-D graphics will hit midprice PC range in Compaq Presario 4600 series, with 266 and 300 MHz Pentium II models at $1,799 and $1,999, respectively. Mktg. Mgr. Scott Holder said price points were achieved by performing MPEG-2 and related DVD decoding in software, and using hardware-based, 2nd-generation Accelerated Graphics Port (AGP) to enhance video quality. AGP connects graphics card directly to PC's system memory at 133 MHz bus speed to exploit main system's resources, rather than relegate video processing to limited graphics memory.

AGP is used in flagship Presario 4860, too, with $2,399 PC slated for delivery late next month with as-yet unspecified, next-generation Intel processor. It's linked to Compaq's top-shelf 15[inches] ($399) and 17[inches] ($699) FX series monitors with integral JBL Pro loudspeakers, 3 powered USB connectors, various PC controls. PC has built-in Creativity Imaging Center for photo and video editing. Like all new Presarios, 4860 comes with 56-kbps modem and Internet Express - direct one-button connection to Internet. Compaq picks up tab for first 50 hours through Internet service provider GTE.

HP also gives customers 50 hours of free Internet time, and new Pavilion entries feature loudspeakers by Polk Audio. Besides lower price models, company said it will introduce $1,699 Pavilion 8260 with 266 MHz Pentium II chip this week. Entry-level $799 Pavilion 3260 will retain slimline limited-expandability design of Model 3100 it replaces.

Further PC price reductions are likely this quarter, with Intel announcing 33% cut for 233 MHz Pentium II chip last week, to $268 from $401. Regular quarterly repricing of microprocessors should come next month and affect all Pentiums. Source familiar with Intel plans told us company strategy is to make Pentium II processor feasible for inclusion in under-$1,000 PCs this year.

PC/TV convergence category might benefit from lower priced PCs, but package stickers are likely to remain high owing to large-screen displays. Gateway 2000, PC maker that launched convergence category with its Destination system, will push home theater envelope further with inclusion of Fujitsu 42[inches] flat plasma panel for display. Company will show system privately during CES, Television Digest has learned, with market launch slated for April. Upgraded Destination system also includes voice-activated home automation function, we're informed. Meanwhile, although Compaq/RCA PC Theatre collaboration now seems to be history, Thomson will pursue convergence category on its own with new 36[inches] direct - view multimedia monitor and 42W plasma display that has PC applications (see separate report, this issue).

NEC said it plans to increase its stake in Packard Bell NEC to 49% from 20% through additional $300 million investment in U.S. PC maker. Pres.-CEO Beny Alagem - Packard Bell founder - and his partners retain 38%, with France's Groupe Bull holding 13%. U.S.-based PC company last week denied Japanese press reports that it was preparing to cut 1,000 employees this month from current 6,000.