IBM Unveils 7 PCs, Cuts Prices on Older Units : Analysts Say New Lineup Is a ‘Powerful Weapon’
IBM on Thursday unveiled seven new personal computer models designed to plug holes in its product line and to combat the ever-growing inroads into its business by such competitors as Compaq Computer.
The new PCs include three desktop models built around Intel’s top-of-the line 80386 microprocessor chip, including one machine that IBM manager Richard Gough called “the fastest PC in the world.” Until now, IBM has offered only a floor-standing 386 model, which IBM sales forces have successfully sold directly to corporations but which has done poorly in retail outlets.
Compaq is expected to strike back shortly. The Houston-based company had a 65% market share of machines with the 386 computer “brain” sold at retail outlets, compared to 25% for IBM in the first quarter of this year, according to StoreBoard, a Richardson, Tex., market research concern.
Analysts Impressed
Compaq has scheduled a product announcement for June 20, and “we intend to maintain our performance leadership,” said Jim D’Arezzo, Compaq’s vice president for corporate marketing. “We’ll be delivering our machines immediately and in volume,” he added, noting that IBM’s new top model won’t be shipped until 1988’s third quarter.
Still, analysts said Thursday they were impressed by IBM’s new products as well as the price reductions of up to $2,000 that IBM announced on some older products. “In terms of price and performance, these new machines stack up pretty well,” said Peter Teige, an industry analyst with Dataquest in San Jose.
The announcement of desktop 386 machines--dubbed the model 70--”was a shoe that took a year and two months to drop,” he added. People have been waiting for such a machine since IBM unveiled its first Personal System/2 models, its newest line of computers, in April, 1987.
Teige predicted that the new lineup, which also includes a pair of souped-up model 50s incorporating Intel’s less-powerful 80286 chip, “will arrest the erosion of IBM’s market share.” The new model 50s have bigger and faster hard disk drives for data storage.
“This is going to give IBM a powerful weapon,” he added.
IBM’s share of the market for IBM-style machines, measured in units sold, dropped to 24% last year from 31% in 1986. In dollar volume, IBM’s market share fell to 37% last year from 41% in 1986, according to Dataquest. The difference in market share figures reflects IBM’s virtual abandonment of the market for the cheapest PCs.
“There’s no question this announcement is a formidable challenge to Compaq,” added Tim Bajarin, head of Creative Strategies Research International, a Santa Clara, Calif., market research concern. Compaq’s D’Arezzo acknowledged that the company probably would announce price reductions on existing models at its June 20 announcement.
Mum on Micro Channel
Bajarin called the IBM machines’ small 16-inch by 20-inch “footprint,” which takes up less desk space, “a dazzling engineering feat.” But Compaq contended that the smaller IBM machines provide less possibility for expansion than do Compaq’s.
Little mention was made by IBM Thursday of the much-ballyhooed Micro Channel communications pathway that it has built into the models 50 and higher. IBM compares Micro Channel to a superhighway that allows data to travel among the computer’s components as much as three times faster than the old architecture still employed by competitors.
Response to the Micro Channel has been “underwhelming,” in large part because there are currently few tangible benefits, said Andrew Seybold, publisher of Outlook on Professional Computing. “The next part of the Micro Channel ballyhoo is going to be when they have something concrete to offer,” he added.
