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IBM melds commercial, consumer features in new PC

Big Blue quietly introduces a small, low-cost commercial PC starting at $679, its first product since recently retooling its PC design and manufacturing operation.

    IBM has quietly introduced a small, low-cost commercial PC starting at $679, its first product since recently retooling its PC design and manufacturing operation.

    The new PC 300 model, which will be available in an Aptiva home PC version, is IBM's first serious attempt to combine commercial and consumer PC design and manufacturing. But the new foray has pained IBM, as PC sales plummeted while Big Blue realigned its operations.

    "(The retooling) is a good thing, and it's economical," said International Data Corp. analyst Roger Kay. "IBM can use the same basic system with cosmetic changes to suit different market segments."

    The strategy is in line with IBM's plan to fold its consumer operations into its commercial division, say analysts. But streamlining manufacturing, coupled with an exit from retail PC sales in favor of a direct sales model, has hurt IBM in the short haul.

    Revenues for IBM's personal systems division--responsible for desktops, notebooks and PC servers--declined $550 million during the first quarter. In earnings announced Tuesday, IBM disclosed that Aptiva revenue fell 45 percent and PC 300 sales declined 30 percent.

    For the long term, IBM's changes in design and particularly in manufacturing "will go a long way in helping revitalize its PC business," said Technology Business Research analyst Jim Garden.

    While efficient and cost-effective, the new strategy also intends to meet customers' changing needs, particularly for telecommuters, students and small businesses, which have similar needs and buying habits. For those customers, PCs with a combination of commercial and consumer attributes make sense, said Greg Ross, IBM's worldwide product manager for the PC 300.

    The company is also banking on the convergence in design to appeal to "companies that want to put PCs in their employees' homes," Ross said. He referred to recent moves by Delta Airlines and Ford to provide employees with PCs for a nominal monthly fee. IBM, along with Hewlett-Packard, is supplying systems to Delta.

    IBM has also incorporated the design philosophy into its NetVista line, which the computer maker plans to start selling next week. Rather than designing separate consumer and commercial systems, the first NetVista--an all-in-one model built around an LCD display--suits either market with minor cosmetic changes.

    The new PC 300, like NetVista, departs from IBM's typical bulky and boxy design. The new model is about the size of a VCR, which Kay said makes it fit well in homes, dorm rooms or small businesses tight on space.

    The entry-level PC 300 model comes with a 500-MHz Celeron processor, 32MB of RAM and Windows 98 SE, and retails for $679.