The computer maker hopes to ride industry's new wave of growth: low-cost computing.
The new model will be an addition to Compaq's Presario 2000 series, which is one of the first lines of feature-rich consumer PCs designed specifically to sell for under $1,000. To date, only aging or stripped-down PCs have typically been pushed in this price category.
Compaq's 2120 features a 150-MHz x86 (Intel)-compatible processor from Cyrix, and a 2GB hard disk drive. The system also includes a modem and a CD-ROM drive. A 14-inch monitor is available for $299.
Though a lot of consumers in lower income brackets have been shying away from buying a consumer PC because of the high price of feature-rich systems, the new sub-$1,000 PCs now offer a compelling choice, according to Scott Miller, an analyst with market research firm Dataquest.
Sales of low-cost consumer PCs such as the Presario 2000 series and PCs from Packard Bell and Monorail, as well as AST's Advantage line, are doing a brisk business at retail stores, according to a recent report from Computer Intelligence, a market research firm.
The report found that low-cost consumer PCs "have stimulated a new wave of growth in the U.S. retail PC market." Compaq is attempting to be the price-performance leader in this market in order to drive up market share and maintain its status as the top consumer PC supplier in the retail channel.
Compaq says that its previous model, the 2100 with a 133-MHz Cyrix processor, has sold through the channel and that the 2120 replaces the older model. Compaq will continue the strategy of offering one entry-level model at the $999 price point throughout the year as it learns the buying habits of consumers in this market, according to a spokesperson.
"What needs to happen now, and it looks like it will happen, is to eventually get the pricing with monitor below $1,000 on these systems," said Miller. "I don't think that's too far off. There's a lot of potential for this system."