IBM Offers Cheaper Minicomputer : Technology: The addition to its AS-400 line will cost about $4,000 less than the previous low-end model.

International Business Machines Corp. on Wednesday announced a lower-priced model of its popular minicomputers, a product line that has been one of its few bright spots this year.

The new version of IBM’s Application System-400 computers costs $12,000, about $4,000 less than the previous lowest-priced model.

The computer is aimed at small businesses or departments within large businesses. Up to 14 terminals can be connected to the machine, although IBM said typically it would use up to six terminals.

Minicomputers fall in size between personal computers and the giant mainframes in which IBM dominates.

IBM’s sales of personal computers and mainframes have been sluggish and their profit margins pinched by price cutting in the industry. That has damaged IBM’s financial results: Its operating profit fell 74% in the first half of the year, while revenue slipped almost 8%.

In contrast, sales of the 3-year-old AS-400 minicomputer line have shown double-digit growth over last year, IBM says.

Robert J. LaBant, IBM’s vice president in charge of minicomputers, said the machines are popular partly because they appeal to a broad range of customers, from small businesses that buy one machine to major corporations that have installed hundreds.

The 12 models in the AS-400 line range in power from the new entry-level model to a dual-processor version costing more than $1 million that can be hooked up to hundreds of terminals.

LaBant said small businesses that use four or more PCs linked in a network could save money with the new minicomputer. He admitted that that pitch could end up stealing business from IBM’s personal computer line.

Industry analyst David Card of International Data Corp. said the lower-priced machine should enable IBM to go after smaller businesses than it has in the past with the AS-400 line.

IBM renewed the entire line in April with more powerful processing units--the “brains” of the machines--at the same time that it cut prices. LaBant said the improvements aided the sales growth.

IBM’s minicomputer line brought in almost $15 billion in revenue last year. It would be the world’s second-largest computer company behind IBM itself if it stood alone.

The new low-end computer, a desk unit the size of a large waste basket, carries an unusual 90-day satisfaction guarantee. IBM says the system can be returned for a full refund for any reason.

The guarantee is believed to be unique in the computer industry, LaBant said.

IBM also will offer the new machines preloaded with applications software, such as programs designed for government agencies or doctors’ offices. It says a customer can take the machine out of the box and have it running in 10 minutes.

IBM said it intends to rework the operating system software for the AS-400 line so it can more easily run applications software written for other types of computers. That is part of the push by computer customers for “open” computers, those that use non-proprietary technology.

Next week, IBM is scheduled to announce new mainframes and associated products, including a strategy to use the giant machines as “information warehouses” inside companies, linking all the computers a company owns into one giant data base.