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Compaq notebook in cool market

The PC giant is expected to release new consumer notebooks next week amid a price crunch in the sector.

Tech Industry
Compaq Computer will release two new consumer notebooks next week, including another model based around the Cyrix MediaGX processor, amid signs of slowing sales and declining prices in the portable arena.

While notebook sales continue to outpace desktop sales, at least one marketing research firm has said that notebooks in retail and mail order have not grown as fast as expected this year, while consumers have increasingly flocked to models priced at $1,500 and below. Such a trend would bode ill for the PC industry, which has increasingly looked toward the notebook market for profits since PC prices began to slide last year.

"Things have not been as strong as expected," said Stephen Baker, hardware analyst at PC Data. Sales have grown in the "mid-teens" for three out of the first four months of the year, he said.

While healthy, that growth rate is lower than the 20-plus percent growth that the notebook market has produced in recent years, or that has been predicted for the future. Intel, among other companies, has predicted a compound growth rate of approximately 20 percent or more through 2001.

Retail price points, meanwhile, have crept down, he added. Sub-$1,500 notebooks made up 26 percent of the retail and mail order market, according to PC Data. The same category accounted for 43.7 percent of notebooks in April. Similarly, the average selling price has declined from $1,950 in March to $,1800.

Both upcoming Compaq notebooks fall above the $1,500 line, although one of the models is clearly aimed at the value market. The Presario 1230 notebook to be released Monday will be Compaq's third notebook based around the MediaGX. The machine will be based around the 233-MHz version of the chip and cost around $1,699, said sources. The machine is positioned to be the successor to the Presario 1220, another MediaGX-based notebook.

Compaq will also release a higher performance notebook in the Presario 1600 series. 1600 Presarios contain Pentium MMX chips, more memory, and often more features than other Compaq retail notebooks.

Interestingly, although it was the Compaq-Cyrix combination that ignited the sub-$1,000 desktop PC rush, Compaq's success in retail notebooks is currently most pronounced in the middle tier. Compaq is the number one vendor for notebooks priced between $1,500 and 2,000 as well as notebooks over $2,000, Baker said.

The companies driving the low end of the market are Toshiba and IBM.

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