IBM takes final steps to retire old PCs

With the release of new NetVistas, Big Blue writes the final chapter in the epitaph of its aging PC 300 and Aptiva computer lines.

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IBM today wrote the final chapter in the epitaph of its aging PC 300 and Aptiva computer lines.

IBM substantially broadened its NetVista line today with consumer and corporate models, which are taking over for the PC 300 and Aptiva product lines. Since the launch of NetVista PCs in May, Armonk, N.Y.-based IBM has been quietly putting its older commercial and consumer models out to pasture.

"This announcement for IBM is the final transition. They've got all their products out now, and they're going to close down the IBM PC 300 and Aptiva," Technology Business Research analyst Bob Sutherland said.

IBM has commitments for both of the older PC lines through the end of the year, Sutherland said. "But when it comes to new orders, they're not going to outwardly advertise it," he said.

IBM also will sell NetVista models in the Asia-Pacific region, but the company will continue using the Aptiva name there. "Aptiva is like Coca-Cola; the brand is so popular over there," Sutherland said.

Robert Moffat, general manager of IBM's PC division, said IBM is No. 1 in desktop sales in the Asia-Pacific region.

"For an American company," he said, "that's pretty good."

But in the Americas and Europe, Aptiva has been a money-losing proposition for IBM, which in January pulled the consumer PC line from store shelves in favor of direct sales.

The new NetVista models include the A20i, A20m and X40i.

The NetVista "two-piece" A20i is targeted to home and home-office users and is priced with budgets in mind. The all-in-one X40i is designed for the home and home-office market and is similar to the business-oriented X40--IBM's poster PC for the product line.

The entry-level $699 A20i model comes with a 600-MHz Celeron processor, 64MB of RAM, 10GB hard drive, 48X CD-ROM drive, 56-kbps modem and the new Microsoft operating system Windows Me.

The snazzy all-in-one X40 and X40i models, which are being built with LCD displays, are pricier than most other IBM desktops and sell for about $600 more than the "sweet spot" of the PC market, which is $1,300.

"The X40s are pretty cool," International Data Corp. analyst Roger Kay said. "My sense is they won't sell a huge number of those, but they will sell enough to be comfortable. That's sort of their flagship, showcase product. But then again they have their workaday A series."

Availability could be an issue costing IBM sales. Of the four NetVista A20i configurations for sale on the ShopIBM Web site, only one is in stock, with the others available "within four weeks." This includes the low-cost $699 model. Other models come with a request for customers to call for availability.

Still, Kay sees no serious supply problems, despite recent shortages of IBM portables and servers.

"I don't think they're having any extraordinary supply problems, but the industry component supply is still pretty tight," Kay said. "You're not just talking about the higher-level processors, but odd pieces of components that slow things down."

Kay said IBM executives have expressed extreme frustration at the industry-wide component crisis. "They feel they could have done a lot more business," he said.

In one recent case in Europe, IBM could have sold 100,000 more PCs had processors been available, said a source familiar with the situation.

With its product transition complete, IBM must now execute. Until now, the company's PC division, which lost $69 million in the second quarter, could in part blame losses on streamlining operations and other measures such as cost-cutting or supply-chain improvements.

"The management changes are going to bring about a lot of change in the short term, but maybe not before the end of this quarter from a financial standpoint," Sutherland said. You're going to see the PC group dramatically change how it does business."

On Sept. 1, Moffat replaced David Thomas as the head of IBM's beleaguered PC group, which makes PCs, portables and servers. Moffat's experience in finance, operations and manufacturing is seen as important to the division's return to profitability.

"IBM is consistently a product-focused company," Sutherland said. "With the design and go-to-market strategy on the NetVista, IBM is more focused on the customer, which is what all its competitors do. That is essential to success."