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Compaq to aim stylish PCs at businesses

Compaq Computer is hoping that a little bit of style and the elimination of some clutter from the guts of its new PCs will help revive its sales to the business market.

Compaq Computer is hoping that a bit more style and a little less clutter in the guts of its new PCs will help revive sales to the business market.

Next week, Compaq is expected to announce new desktop systems that shed some archaic slots and connector ports, in an effort to make computers that are both easier to use and less expensive to manufacture, industry sources said.

The company will also detail new Internet services at an event to be held in New York on November 10, the sources said. Chief executive Michael Capellas, along with "key Internet leaders," will be on hand for the event, ostensibly to offer details on so-far unannounced partnerships.

Compaq could not be reached for comment.

The new business PCs will be the latest moves under Capellas's leadership. Last month, Compaq introduced redesigned consumer PCs that feature a slim, blue exterior. But while the consumer market has been more accepting of non-standard colors for computers, the corporate market has been slower to embrace the more fashion-oriented PCs.

Business sales are vital to the Houston-based PC manufacturer, which recently lost its leading share in the U.S. market to rival Dell Computer for the first time. Compaq's commercial PC unit accounted for 30 percent of the company's third-quarter revenue, but lost some $169 million, following a second-quarter unit loss of $225 million.

Compaq is aiming to change that. Besides adding color, these computers will also likely be smaller than standard boxes, thereby saving desk space, sources said.

Lower prices could well be part of the appeal: Smaller computers potentially will cost less because fewer materials are required.

Inside, the PCs will forgo some "legacy" PC technology such as ISA expansion slots in favor of USB ports, which can automatically recognize new peripherals such as printers and scanners as they are connected to the PC, sources said.

Intel and Microsoft have long been exhorting PC makers to get rid of legacy technologies, because exclusive use of newer technologies for expanding a PCs capabilities, such as USB, allow for a smaller, more affordable design that is more reliable. For information technology managers who often have to keep track of and service thousands of different computers, the exclusive use of newer technologies could reduce the costs of maintaining their networks, observers have said.

Intel, for one, has been pushing the Easy PC initiative on PC makers. Slowly, PC companies appear to be moving in that direction.

Along with Compaq, Dell is set to introduce a consumer PC later this year that focuses on making Internet access easier, much in the vein of Apple's iMac. In fact, Apple's iMac can be seen as having initiated the focus on design with the success of the curvy computer--one which eliminated the use of a floppy disk drive and standardized on USB connections.

Wall Street analysts will be looking for indications that the new push for Internet services and products into the small business and corporate market will bring the companies the possibility of better profit margins.

Micron PC, for instance, has indicated it is shifting towards a service-oriented sales model by selling PCs bundled with services such as Web site hosting and Internet connections and letting customers pay for it on one bill. Among other efforts, Gateway is offering a program for small business customers to receive loaner laptop computers during repairs and servicing for an additional fee.

Compaq earlier this year introduced services aimed at a similar customer segment that includes unified messaging services via a Web browser. But these efforts have not been enough to stem the influx of Dell PCs, in particular, into territory once commanded by Compaq.

Compaq's stock has been priced near its 52-week low of 18. The stock closed at 18.69 today.