IBM launches broad consumer PC assault

The new portable for the consumer and retail markets comes with a DVD player and equipment to allow hookup and playback on a standard TV.

IBM also announced five new Aptiva consumer desktop computers. The Aptiva E Series models start at $799 with a monitor and feature DVD, CD-RW, and Iomega Zip drives. For connection to the Internet, the systems allow consumers to choose from a number of Internet service providers, or ISPs, at time of purchase, IBM said.

IBM is also offering a program similar to leasing for both the Aptiva and the i Series notebooks. The new Aptiva models can be "purchased" for as low as $26 a month and an entry-level ThinkPad i Series system for $51.

This comes as some Wall Street investment houses such as Merrill Lynch have called on IBM to get out of the "box" making business. Interestingly, IBM has already done this to some extent. Dr. James T. Vanderslice, senior vice president at the IBM Technology Group, and Acer Group CEO Stan Shih revealed yesterday in a conference call that Acer makes both IBM Aptivas and its i series notebooks.

The new "i" series ThinkPad portables are billed as a "Personal Entertainment Center" allowing the notebook effectively to serve the same function as a video cassette player connected to a TV, but it uses the new DVD format instead. DVD movies can also be watched directly on the notebook.

Some other manufacturers provide this capability to connect to a TV, but it is often done through a separate "expansion-base" unit which attaches underneath and costs several hundred dollars extra, though Apple Computer and Dell Computer offers this connector on their notebooks.

The new notebooks are also offered with large 14.1-inch active-matrix LCD screens and an improved graphics chip. 3D sound is also built directly into the display, IBM said.

The i series are equipped with Intel Mobile Pentium II and Celeron processors and an integrated modem. Prices will range from $1,799 to about $2,800.

IBM has its work cut out for it in the consumer market according to analysts. International Data Corporation (IDC) said in the first quarter of 1999, IBM held five percent of the consumer desktop market, placing them No. 6 in this category. "This represents year over year growth of 27.8 percent, below the total growth of the U.S. consumer desktop segment of 36.6 percent in the first quarter of 1999," said Schelley Olhava, an Analyst at IDC.

"The big question is how profitable their consumer business is. It's not contributing much to the bottom line," said Kevin Hause, another analyst at IDC. "At the executive level they need to articulate how the consumer group benefits IBM...they need to have a vision and bring out products that take them to that vision...they've flip-flopped visions a number of times over the last several years."

But analysts, including those at IDC, are giving IBM credit for more innovative marketing. "It's clear with these announcements that IBM is thinking beyond the 'box' and is committed to the consumer technology market," said Bill Ablondi, Principal Analyst at MarketMaps in a statement.

Moreover, the Acer relationship could work to the benefit of IBM. "The fact that they can get a large manufacturer to churn out systems is good," said Hause.

On the strategic front, IBM is putting more emphasis on the small business market with its Aptiva line, particularly at national computer stores such as OfficeMax. The company has also begun to sell consumer PCs directly through its home and home office Web site.