AST Research May Join the Ranks of IBM-Clone Makers
AST Research Inc., the Irvine company that came out of nowhere five years ago to become the leading supplier of “add-on” products for the IBM personal computer, is expected to announce today that it is joining the ranks of the IBM-clone makers and will soon be selling its version of IBM’s most powerful desk-top machine.
The move comes at a difficult time for both AST and the computer industry, and analysts have already questioned whether the company can sufficiently distinguish its product from the others battling it out in the slow-growing and shakeout-riddled PC market.
“Clearly it’s a risk, but it’s something they have to do,” said Jon Gruber, an analyst with Montgomery Securities in San Francisco, “It’s clear they are in a major transition.”
The entry into the PC look-alike market comes just six months after AST saw sales of its most popular add on products plummet in the wake of IBM’s decision to include some of the same features offered by AST devices as part of its basic computers.
Thomas Yuen, an AST founder and leader of its business-development efforts, said the company is entering the PC market because it represents the best chance to put new vigor into its slumping sales and profits.
“The company needs to grow,” Yuen said. “If you don’t, in this industry, you collapse.”
Yuen said sales of AST’s version of IBM’s PC AT will begin in January. Retail prices are expected to range from about $2,000 to $4,000. The comparable IBM line sells for as much as $4,000 to $5,300.
Although the number of PC-clone makers is increasing while the sale of personal computers is growing only slightly, Yuen predicted that AST will find a market because its machines are faster, more powerful and less expensive that their major competitors--including IBM, AT&T; and Compaq. In addition, Yuen said, AST has strong name recognition among consumers and established ties with retailers to give it an important edge.
Still, analysts remained skeptical.
“It’s a very crowded market,” said Thomas Galvin, an analyst with Shearson Lehman American Express in New York. “Time will tell whether they are jumping out of the frying pan and into the fire.”
Sales Growth Expected
According to Dataquest, a San Jose market-research company, an estimated 17.1 million personal computers will be sold this year worldwide, up 5% from the 16.2 million sold in 1985. And next year won’t be much better, said Norm DeWitt, a Dataquest analyst who predicts sales of 18 million units in 1987.
Dataquest projects that sales of IBM PC ATs and their clones will jump to 1.4 million units in 1987 from 1.2 million units worldwide this year, up 16% but still constituting a relatively small market.
Although the market is not growing as fast as it once was, Yuen said AST is targeting the red-hot desk-top publishing field by offering the industry’s first personal computer printing system among IBM-compatible machines. So far, the desk-top publishing market has been dominated by Apple Computer’s Macintosh computer and laser printer system.
Yuen said the AST system, which will include a basic computer, a scanner and a laser printer, is expected to cost about $10,000, or about $2,000 less than the Macintosh system.
Dataquest has estimated that sales of desk-top publishing systems will soar to 1.5 million in 1990 from fewer than 100,000 this year.
