IBM PC Line Redrawn

Event Summary

9/14/2000 [Source: IBM]

IBM has added new models to its NetVista PC family, completing the desktop PC model transition begun earlier this year. The activity continues IBM's Edge of Network initiative, with devices designed from the ground up for fast, high-bandwidth Internet access, easy set-up and simplified use.

Additions include:

• New Netvista desktop systems
  
  
• New data recovery/data transfer software
  
  
• IBM Direct "Build Your Own" NetVista models
  
  
• New IBM microdrive
  
  
• NetVista models with Microsoft Millenium software pre-loaded

The new models offer software stability, with common designs deployed among several different design styles - including desktop, micro-tower and mini-tower. The majority of enterprise customers use custom software, which has to be re-qualified with every new systems deployment, an expensive process that can take 60 - 90 days. With one platform offered across a choice of design styles, the NetVista A40 models help eliminate the need for software re-qualification.

IBM also announced several new "beyond-the-box" NetVista capabilities, including IBM Backup and Restore, a data protection and recovery solution; IBM Data Transfer, a tool for simple data transfer from an old PC to a new PC; and IBM Build Your Own, a configure-to-order direct sales program.

New models introduced are the NetVista A20i, A20m, A40i, A20 and A40 systems. The entire NetVista family now includes:

• The X series of all-in-one PCs (NetVista X40 and X40i models)
  
  
• The S series of legacy-free PCs (NetVista S40 and S40p models)
  
  
• The N series of thin clients (NetVista N2200 and N2800 models)
  
  
• The A series of mainstream PCs for businesses/large enterprises (NetVista A20, A40 and A40p models)
  
  
• The A series of mainstream PCs for small businesses (NetVista A20m models)
  
  
• The A series of mainstream PCs for individuals (NetVista A20i and A40i models)

Market Impact

This is a continuation of the revamping/retrenching/restructuring that IBM started almost a year ago (see IBM to Make Cuts in PC Business - Real Change, or Just Buying Time? ). We feel the consolidation under the "NetVista" brand will be a mixed blessing for IBM. On one side, there is an attempt to tie into the "forward-looking" brand used for their Internet appliance product line; the flip side is that none of IBM's main competitors (with the possible exception of Gateway) use a single brand name for both home and business PCs. We believe expecting the customer to remember the difference between a NetVista A20 (large enterprise), a NetVista A20m (small business), and a NetVista A20i (home) is a little much. Especially when contrasted to HP's Vectra and Pavilion lines, or Dell's Dimension and Omniplex lines.

IBM has been losing both US and worldwide market share, and its worldwide sales dropped between Q2/99 and Q2/00, at a time when the worldwide PC market grew by 15% [Source: IDC]. Last year's decision to discontinue retail sales of the Aptiva home PC (see IBM to Sell Aptiva Direct) probably helped drive down sales, at least temporarily. Although we dislike the resultant increase in confusion (see above), we are hopeful that unifying the product line will allow IBM to regain its focus, and reverse its slide. [One side comment: the Aptiva and PC 300 product lines are still available, but will eventually be discontinued.]

User Recommendations

IBM is still a leading PC manufacturer, and should be included in any selection research. Although its fortunes have waned in the past year, this announcement shows it is still trying to stay in the game. However: brand-name changes should have no effect on purchasing decisions. Potential buyers should look at feature sets of the new NetVista products and compare them judiciously to competing models from Compaq, Dell, Gateway, and Hewlett-Packard. (See Table 1). Comparisons should include features such as processor, memory, hard drive capacity, number of I/O slots, and of course price.

Table 1. Desktop Product Line Comparison