Compaq launches new products in crowded field

The computer giant releases five new products, as its beleaguered commercial PC division struggles to reach profitability.

4 min read
Compaq Computer released five new products today, taking another stab at driving up profits from commercial PC sales.

The Houston-based computer maker, like its rivals, introduced new PCs based on Intel's 815e chipset and new portables featuring the 750-MHz SpeedStep processor, technologies available for the first time today.

Compaq is trying to distinguish its PC products from others by offering a sleek, smaller version of its Deskpro EN Series PC and adding two new projectors and a flat CRT monitor to the mix.

The company has been looking for a home run with small-business and corporate buyers, as its beleaguered commercial PC division struggles to reach profitability. Overall, the company is back on track, according to a recent report from market researcher Gartner.

But commercial PCs remain a troubled area, said Gartner analyst Kevin Knox. "Compaq still has work to do here, but we predict the company will regain its leadership role in the PC market," he said.

While its consumer PC division continues to hold its own, despite Hewlett-Packard's recent retail success, Compaq's commercial group has been losing money.

For the first quarter, Compaq's commercial PC group lost $19 million. But that was a big improvement over the previous quarter's $78 million loss, which picked up from a $169 million third-quarter loss. By comparison, first-quarter consumer PC revenue rose 35 percent year-over-year to $1.8 billion, while shipments increased by 50 percent.

Despite improvements in efficiency and a goal of taking 60 percent of commercial PC sales direct this year, Compaq continues to wage a bitter battle with Dell Computer for market share. For the first quarter, market researcher International Data Corp. placed Dell just ahead of Compaq in U.S. PC shipments, but Compaq has the lead worldwide.

Today's announcement is one step in Compaq's slow, methodical strategy for recovery. Since January, the company's commercial division has slowly retooled its product line, introducing the new iPaq and one of the smallest and most flexible Pocket PC handhelds around, the iPaq H3600.

While Compaq has broadened its product mix, also adding printers, it has systematically reduced the number of complex configurations, particularly among PCs.

"Compaq is reducing the number of products in their product line," Knox said. You are going to see fewer products, really to allow them to manufacture more efficiently. With iPaq, for example, you have a couple of canned configurations, and those are the configurations that the majority of people need."

One of iPaq's distinguishing features is its small size, something Compaq until now has not matched with a more typical PC. With the Deskpro EN Series Small Form Factor--one of three sizes available--Compaq hopes to woo customers looking for more in less. About 20 percent smaller than typical EN models, the 12.5-by-14.6-by-3.8-inch PC is Compaq's answer to similar models from Dell, Micron and others.

The model is available with Pentium III processors, starting at 600 MHz and going up to 933 MHz, and with the new 815e chipset.

The entry-level Deskpro EN Series Small Form Factor PC comes with a Celeron 600-MHz processor, 64MB of SDRAM, 10GB hard drive, Compaq S710 monitor and Windows 98 or Windows 95, for $1,178.

Portable upgrade
Compaq today also beefed up its line of Armada portables, in perhaps the most significant upgrade since the company revamped the line nearly a year ago. While some changes play catch-up with competitors, others put Compaq ahead of its rivals, particularly IBM.

The Armada M700 will be available with the 750-MHz SpeedStep processor unveiled by Intel today, and Compaq is adding models with a 15-inch display. While Dell and Gateway have had large notebook LCDs for some time, Compaq stayed mainly with 14.1-inch displays, which cut down on the weight of units.

But in a trend-setting move, the PC maker has significantly beefed up its sleek, ultra-portable Armada M300. New models feature a 600-MHz SpeedStep processor and a 12.1-inch display in a 3.4-pound package. Competing models, such as the Toshiba Protégé 3440CT and Gateway Solo 3300, either offer smaller LCDs or do not offer higher-quality TFT displays.

The new models will be available with the choice of Windows 98/95 or Windows 2000/NT, with July availability for the former and August for the latter.

The new flat CRT 17-inch monitor, the $349 V710, is yet another area of catch-up for Compaq. Dell has offered a comparable model for some time. Flat CRTs should not be confused with flat-panel monitors, which feature an LCD display and typically cost three times more. But flat CRTs are somewhat smaller than typical displays, offering a trade-off for the cost conscious.

Compaq also beefed up its projector line, adding two new models, the MP1400 and MP1800. The Texas longhorn is the only major PC maker offering its own brand of portable projectors. Epson and InFocus, which bought rival Proxima in March, are among a handful of companies specializing in projectors.

The market for the devices, which can be used for showing educational or business presentations as well as movies and other types of multimedia, is booming, according to IDC. In a recent survey, the market researcher found companies with fewer than 100 employees owned 7.1 projectors per site, while operations with more than 500 employees have 19 per site.

Compaq's new models feature more brightness, higher resolution support and lighter weight.