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Is Digital falling off the desktop?

Digital Equipment's line of PCs is dying a slow death, analysts say, as the company skipped yesterday's Pentium II rollout.

2 min read
Digital Equipment's line of PCs may be dying a slow death.

Despite a flurry of aggressive Pentium II-based introductions from all of the top PC makers yesterday, Digital was silent. The computer giant was not among the 40 domestic manufacturers who announced a broad array of new systems using three new Pentium II chips from Intel.

This is a sign, among other recent indications, that the days of the company's desktop PCs may be numbered, industry analysts say.

"They were conspicuously absent yesterday," said Kevin Hause, an analyst from IDC.

The dynamics of the looming merger with Compaq Computer are contributing to the retreat from desktops. As the largest PC manufacturer in the world, Compaq already features one of the strongest desktop PC lines on the market. To make matters worse for Digital, Compaq has produced more computers than it can sell at the moment.

"Compaq's got plenty of PCs," said Roger Kay, another IDC analyst, in reference to Compaq's bloated inventory levels. "They don't need anymore."

Digital denies that it is phasing out its PC line and says it will announce new Pentium II systems as soon as they are released.

"They haven't completely rolled over yet," Hause admitted. "Until everything with the merger is official, they're not going to change any business practices."

But Digital's desktop line is widely expected to fade quickly after the merger is done. Kay predicts that the PCs will be finished within a year of Federal Trade Commission approval of the deal.

In the meantime, See related story: Digital revenue down Digital systems are going at bargain-basement prices on Web auction sites, even through Digital's own direct-purchase service. The low-end 3010 system, with a 166-MHz AMD K6 processor, 16MB of memory, and a 1.2GB hard drive is offered on Digital's site for $711.

The bargains are still better elsewhere. At Web Auction, a Digital Celebris FX 5200 with 200-MHz Pentium processor, 16MB of memory, 1.2GB hard drive, and a Ethernet controller chip was recently sold for $611. The estimated retail price of the Celebris FX 5200 is $1,399, according to Web Auction.

"Treading water would be the way to describe it," Kay concluded.