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Compaq mounts all-out assault

The PC maker releases a new line of Presario home computers with lower prices, higher-performance, and new designs.

Compaq (CPQ) threw down the gauntlet in the the consumer PC arena today, releasing a new line of Presario home computers with lower prices, higher-performance, and new designs.

The new Presario 2200, 4500, and 4800 introduced today represent an acceleration of price cuts in the consumer PC market, according to analysts. The new Presario 2200, for example, contains a Cyrix (CYRX) Media GX 180 MHz microprocessor and starts at $799. The Presario 4500 starts at $999 and contains a Pentium 200-MHz processor. Compaq's first $999 computer came out in February, with a 133-MHz Cyrix microprocessor.

The company also added a consumer system with a Pentium II processor and a DVD drive. The model with a DVD drive is slated for shipment in September and will be Compaq's first in this area.

Lower prices are being fueled by an operations overhaul, according to Richard Zwetchkenbaum, research director at International Data Corporation. The company cut the number of Presario models and changed the designs of the computers so that the same parts could be used in different models.

Such streamlining has allowed Compaq to reduce the number of parts in the entire line by 40 percent and cut the product development cycle by 50 percent, he said. Overall, the company claims to have increased operational efficiency by 400 percent, which is leading to lower prices.

"They've gone back to basic value: meeting price points and cutting costs," he said. "Compaq wants to get as much cost out as possible. They want to be the direct computer company with an indirect model."

The new models come amid reports that Compaq continues to take away consumer market share from other PC makers. The Houston-based company obtained a 25.7 percent consumer PC market share in May, a 48 percent increase from the same month a year before, according to Matt Sargent, an analyst with Computer Intelligence. Compaq is now the No. 2 manufacturer in units shipped through that channel, which includes computer superstores and traditional retailers, second only to Packard Bell NEC with a 30.3 percent share.

"Hewlett-Packard (HPW) has really fallen. Acer has really fallen. Apple (AAPL) has gone form 9 percent in May 1996 to 2.1 percent," Sargent noted.

In consumer notebooks, Compaq has grown from a 3.7 percent market share in May 1996 to a 22.3 percent share, he added.

There are four classes of computers in the Presario line. The 2200 series contains a Cyrix MediaGX processor, a 33.6-kbps modem that can be upgraded to a 56 kbps, 16MB of memory, a 1.6GB hard disk drive, and an 8X CD-ROM drive. The computer, which ships this month, starts at $799 without monitor and $999 with a Presario V410 monitor.

The 4500 series, which are minitower designs, start at $999 for a computer with an Intel (INTC) processor, a 33.6-kbps upgradable modem, a 16x CD-ROM drive, a 2.1GB hard disk drive, and 16MB of memory. Other models are available with 233-MHz Pentiums with MMX multimedia features and higher-grade components.

The 4800 series computers come with Pentium MMX processors ranging from 200 to 233 MHz, or Pentium II processors running at 233 to 266 MHz. The computers contain Dolby digital sound, full-screen MPEG2 video features, 24x CD-ROM drives, and 6.5GB hard disk drives. The 4800 series, which range from $1,999 to $2,699, also incorporates Compaq's Creativity Imaging Center technology, which allows users to capture images or video from camcorders or TVs using standard video jacks.

Both the 4500 and 4800 computers contain a new "Instant Internet" button, which enables users to link up to the Net when pushed. A series of Internet access providers and online services are participating, including America Online (AOL).

Finally, the Presario notebook group consists of the 1200 and 1600 series. These computers contain Pentium processors and Pentiums with MMX features. These machines range from $2,299 to $2,999.