IBM marks the final transformation of its desktop PC line Monday with its first Pentium 4 models, the NetVista A60 and A60i.
The Armonk, N.Y.-based computer maker unveiled NetVista in May, as it streamlined manufacturing and distribution, cut $1 billion in overall cost, and prepared to retire the IBM PC 300 commercial line and Aptiva consumer PCs.
The new NetVista, of course, is one of many PCs released today in conjunction with the debut of the chip. Dell came out with a new high-end consumer model, the Dimension 8100, while Gateway, Compaq, Hewlett-Packard and others all came out with consumer or small business PCs.
One uniting characteristic of many of the new PCs is a fairly low price. Complete Pentium 4 systems will enter the market at around $2,000. Gateway, for instance, is selling a 1.4-GHz Pentium 4 system with 128MB of memory, 17-inch monitor, a DVD-ROM drive and 40GB hard drive for $2,128. In quantities of 1,000, the 1.5-GHz Pentium 4 costs $819, while the 1.4-GHz version costs $644, slightly higher than expected earlier this month but lower than traditional prices for new processors.
The Pentium 4 models help cement IBM's transition to the NetVista line. "We're going to end the year with 80, 85 percent of our product we ship being NetVista," said Brian Dalgetty, IBM's director of NetVista marketing. "It's been a very successful transition for us, considering we launched NetVista with some new and emerging form factors."
IBM had hoped to complete the exit from the older systems, which cost the company considerably more to manufacture and distribute than NetVista, by the end of the year.
Why IBM went with Intel's Pentium 4
Harry Nicol, GM NetVista Systems, IBM
IBM will continue to sell the Aptiva brand in Japan, but the systems will actually be NetVista PCs.
Besides marking the end of a long transition, which saw the PC division's return to profitability in the third quarter, the new NetVista models show a new side to IBM.
"There's more attention to customer needs rather than just building boxes," said IDC analyst Roger Kay. "And the pricing on the new systems make them very attractive."
Bells and whistles
The IBM of old is best known for fairly expensive systems short on style and the extras consumers crave, he said.
But with a starting price of $2,199, the entry-level NetVista A60i will have to woo consumers with style and goodies to compete against Compaq Computer's Presario 7000T and Gateway's Performance 1400, which start, respectively, around $1,900 and $2,000.
With the NetVista A60i, the consumer model, IBM appears to be zeroing in on features focused as much on entertainment as computing.
"If you look at the folks that are buying at this price and performance range in the marketplace, a lot of what they've been using the systems for is video editing or as a personal home server," Dalgetty said. "Typically, these are the machines having a broadband connection and connecting to other clients they might have."
IBM is using the Pentium 4's enhanced multimedia, video and audio functions--along with the ATI's Radeon All-in-Wonder graphics card and other extras--to woo consumers interested in movie making at home.
But some of those extras, such as an IEEE 1394, or FireWire, connection for transferring data from a digital video camcorder, or DVD-RAM drive for writing DVD disks, cost extra. But all the goodies, including the A60i's choice of beefy 45GB or 75GB hard drives, are focused on providing tools for turning the system into a home entertainment hub.
"There are even some wireless options so you can send the signal around the house to other displays or TVs--the personal video recorder functions displayed elsewhere," Dalgetty said.
Keeping up with Pentium
IBM isn't the only PC maker pushing entertainment features. Gateway's Performance 1500XL and the Dimension 8100 from Dell Computer also pack in the features. And Dell offers several special PC bundles focused either on amateur moving making or digital music.
But analysts see IBM's focus on high-end features as the right use of Pentium 4, whose high wholesale cost will keep PCs using the chip well into the $2,000 to $3,500 range.
"Quite frankly, I think what IBM is doing is the right positioning," said Gartner analyst Kevin Knox. "The P4 is so expensive, you're going to have to wrap around and package a lot of other technologies to get the value out of it initially."
Rambus memory also drives up the system cost, "so you might as well move all the way to the premier elite system," Knox said. "I don't think IBM is going to sell a lot of these systems--or anybody, for that matter."
Like other PC makers offering 1.4-GHz and 1.5-GHz P4 systems, IBM will start taking orders Monday. The 1.4-GHz model with 128MB of RDRAM and a 45GB hard drive sells for $2,199 direct. The 1.5-GHz model with 128MB of RDRAM and a 75GB hard drive goes for $2,699.
Other features include CD-RW and DVD drives, 56K modem, 10/100 networking, Creative Labs SoudBlaster Live audio card, Windows Me, and a choice of a 32MB Nvidia GeForce GTS or 32MB ATI Radeon All-in-Wonder graphics card.