NEC readies new PC assault

Hoping to raise a phoenix from the ashes of its disastrous acquisition of Packard Bell, the company is laying the groundwork for another assault on the North American PC market.

Stephen Shankland principal writer
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Stephen Shankland
3 min read
NEW YORK--NEC, hoping to raise a phoenix from the ashes of its disastrous acquisition of Packard Bell, is laying the groundwork for another assault on the North American PC market.

The company, which shuttered its consumer PC business last year, is readying a new strategy, backed by addtional cash and management talent, to rebuild its PC and server business.

In 1996, Japan-based NEC acquired Packard Bell, then one of the largest consumer PC companies. But Packard Bell's aggressive pricing for home PCs helped trigger a wave of low-cost, low-profit-margin computers that helped sink the company and force massive layoffs.

In the United States, NEC had two computer brands--NEC for business buyers and Packard Bell for consumers--but energy directed at the consumer division proved to be a drag on all operations.

Now NEC is reinvigorating the remnants of the company with cash, new executives and a marketing push planned for later this year, said Steve Boogar, who was appointed chief operating officer two months ago. Boogar, a former NEC employee, had been running his own management consultancy for about ten years, he said in an interview at PC Expo yesterday.

In addition, the company promoted Michael DeNeffe to vice president of marketing and hired Stephen Jordan from Trimble Navigation as vice president of customer service two weeks ago.

NEC Computers sells PCs to the North American market and is a subsidiary of NEC Computers International in Paris, itself a subsidiary of NEC in Japan. Though Boogar wouldn't say exactly how big the "healthy infusion of cash" NEC Computers got from its parent company was, he said it was enough to carry out the new company's strategy--selling PCs to business customers, emphasizing new server products, and planning for a loud marketing splash starting at the end of 2000.

The difficulty for NEC Computers, though, will be taking on Dell Computer, IBM, Hewlett-Packard, Compaq Computer and others churning out nearly identical desktop machines as fast as they can--companies that already have a strong presence in the corporate market.

Though Boogar is confident his company's market share will increase against these giants, that is tomorrow's worry, he said. "Much of our energy is internally focused at the moment," he said, as the company sets up support and marketing and chooses a two- to five-year strategic plan.

"The last thing we want to do is double, triple or quadruple our sales and find out we didn't have the infrastructure to support the business," Boogar said. "Later this year, we will begin to accelerate that growth with more aggressive marketing."

NEC Computer has its strongest presence in the portable market, where it makes about 55 percent of its revenues, DeNeffe said. A further 35 percent comes from servers and Windows CE-based portable devices sold mostly to customers in specialized markets.

NEC plans to make servers a bigger business. One way will be a new four-processor machine set to debut July 17, and another will be through high-end reliable servers based on designs licensed from Stratus Technology, Boogar said. In addition, NEC has an eight-processor Intel server and is working on a 16-processor design, he said.

There can be no doubt that NEC is tenacious in its efforts to win a larger part of the North American market--one need look no further than the billions of dollars it lost through Packard Bell, Boogar said. "If they were not inclined to succeed, I believe the company would have pulled out long ago," he said.