Tech Industry

IDC gives Apple worst rating

In an IDC ranking of PC vendors, Apple gets a stinging review while Hewlett-Packard and Dell garner praise.

SAN FRANCISCO--Apple Computer got a stinging review for lacking a coherent business strategy, while Hewlett-Packard and Dell garnered praise as stellar performers in a ranking of PC vendors delivered here at an International Data Corporation computer symposium.

Apple (AAPL) had the dubious distinction of being the only big-name vendor to receive an IDC rating of only one star in a presentation given by analyst Eric Lewis, director of personal systems research at IDC's Directions '97 conference here. Packard Bell-NEC and Acer joined Apple at the bottom of the heap, garnering two stars each.

What unified these underperformers is a lack of consistent, profit-generating strategies, according to Lewis. "For Apple, it's time to sort out its strategy, and soon. Saying you are going to be the best on the Internet is not a strategy. [Apple has to say] for whom, by doing what, and through which channel. That's a strategy," Lewis told CNET.

The latest announcements of organizational changes and layoffs fix long-standing operational problems, he said. That is good, but the company still needs to clearly state its product strategy for surviving in a world dominated by Windows, Lewis added.

Packard Bell-NEC, formerly two separate companies, has also suffered because of Packard Bell's need to improve its brand image, according to Lewis. Packard Bell must also work to banish a lingering reputation for poor service and quality, other IDC analysts noted at the symposium.

Lewis ranked companies based on criteria including product mixes and business models that can effectively address a variety of markets and which are in tune with pricing and channel sales methods.

Hewlett-Packard (HWP) and Dell (DELL) got four-star ratings because analysts expect continued market share growth and increased profitability.

The report cited HP's worldwide reach as a critical strength that the company can use as foreign markets grow more rapidly than the overall U.S. market. HP is also one of the top three vendors of corporate desktops and servers, both of which are considered essential market segments. And the company is in a good position to become a stronger player in notebook PCs, according to Lewis.

Dell was commended for executing marketing strategies well and being in tune with customers in its direct sales model. It also stands to benefit from global expansion. Lewis said, however, that Dell needs to continue to continue expanding its server business to maintain growth. The company has come on strong lately in servers, surging into the No. 4 spot in 1996, according to IDC, and the lucrative market segment could be a gold mine for Dell.

Although Compaq Computer (CPQ) is the world's largest computer and PC server vendor, the company has had troubles with its line of portable computers. These snafus limited them to a three-star rating. IBM (IBM) got the same rating but also ranks among the most improved vendors, Lewis stated. A focus on the high-end consumer PC market through the Aptiva line of computers as well as the success of its notebooks has helped the company.

On the other end of spectrum, Acer's growth has stalled, according to IDC. After making an aggressive entry into the consumer PC market, it now faces the daunting task of wooing corporate America, where it must go up against the likes of Compaq, IBM, and HP. But the company is operationally sound, Lewis said, and will benefit in the short term from its acquisition of Texas Instrument's portable notebook business.

Several key technologies will underscore growth in 1997 for all the vendors, including MMX-enabled processors and the gradual rollout of DVD. Digital cameras and digital photo labs on a computer will also help generate consumer interest and spark sales of new systems.

For the business market, IDC says the upcoming next-generation Pentium II won't drive sales until the fourth quarter of 1997. The Accelerated Graphics Port--a next-generation 3D graphics technology from Intel--is another performance feature that businesses are looking for, but Lewis predicted that the required chipsets won't be available in quantity until the fourth quarter of 1997.