Whatever global economic rumblings may vex other businesspeople this holiday season, the silicon shakers and megabyte movers of home computer retailing insist that they’re about to rack up sales volumes bigger than ever before.
Here’s why:
“Intentions to buy PCs are up nearly 50 percent over last year at this time,” said Bill Ablondi, chief executive at MarketMaps LLC, a leading new-media analyst whose latest survey for computer industry clients polled 2,000 consumers nationwide.
In happy anticipation that people will really do in December what they said they planned to do in November, computer sellers and consumer electronics retailers have laid out a baffling buffet of binary baubles for 1998.
At the top of the heap are dramatically cheaper sub-$1,000 desktops like International Business Machines Corp.’s E2U, and sleek, new, high-quality sub-$2,000 laptops from the likes of Dell Computer Corp., which has produced a family-oriented portable called Inspiron 3500 specifically to seize the holiday business.
Beyond desktops and laptops is a gigabyte grab bag of computer add-on gadgets, gizmos and gimcracks that include:
– A wide selection of tiny video cameras like Par Technologies’ $249 Kritter that stores movies on your laptop hard drive.
– A menagerie of personal organizers including the first of the new Jupiter class of small computers that use the Windows CE operating system and run for days at a time on flashlight batteries.
– Teeming stacks of special multimedia software led by longtime Macintosh video giant Avid Inc.’s new $139 Avid Cinema for Windows that allows one to store home videos on a computer hard drive and then produce custom movies.
– High-definition television sets at big prices for very little programming so far.
– Digital cameras like the Olympus D-600L ($900) now far better equipped to move photos into PCs using the new FlashPath camera memory card to read pictures into a PC by way of the floppy disk drive.
Underscoring the rush to exploit a growing market’s growing appetite for computer add-ons has been software giant Microsoft Corp.’s sudden decision to start selling a hardware product, Microsoft Digital Sound System 80. It uses new technology built into the 1998 round of computers called USB (universal serial bus) to provide a $199 three-speaker 80-watt high-fidelity sound system for playing music CDs, Internet sound and computer games through a complex of woofers, tweeters and other audiophile gear.
Heretofore Microsoft has shied away from offering hardware products beyond keyboards and mouse-pointing devices, but the boom in low-cost multimedia PCs running Microsoft Windows apparently proved too ripe a plum to resist.
“Sound is an increasingly important part of the PC experience–and often most overlooked,” said Richard Brudvik-Linder, project manager for the sound system with a toaster-size main unit and two surround speakers.
As Microsoft’s $199 asking price for what amounts to a high-end sound system illustrates, the 1998 cast of year-end characters for the annual Christmas quarter consumer electronics sales rush stands out in two ways:
The products are a lot cheaper this year than they were last year.
They also are a lot more powerful and feature-laden than even the most gadget-smitten consumers hardly dared dream of buying last year.
In broad strokes:
Desktop computers that commonly cost about $2,000 last year now can be had in the “sub-$1,000” category. Typical are machines like IBM’s new E2U Aptiva ($799 plus monitor) that comes with a 350 Mhz AMD microprocessor, 48 megabytes of random access memory, a 6 gigabyte hard drive and a top of the line 56 kilobit per second modem.
Equipped with a 4 megabyte video output card, this machine boasts graphical powers that could only be had with a machine costing closer to $3,000 than $2,000 just one year ago. The included Lotus Smart Suite software boasts the same word processing, number crunching and schedule-keeping features used on the largest corporate networks.
In tests for this article this machine performed very close to the level of high-powered Pentium IIs and proved particularly easy to unpack and set up.
Also highly appealing was the Aptiva E3U, for $1,099, which has an 8.21 gigabyte hard drive and 64 megabytes of RAM instead of the E2U’s 48. The E3U’s big selling point is the addition of IBM’s top of the line Via Voice 98 speech recognition software that allows a user to input speech as text in the Lotus software and to issue voice commands to the computer instead of using mouse or keyboard.
Cheap as they are, these powerful $800 and $1,100 PCs are now joined by an emerging class of sub-$500 machines that offer plenty of features. For example, the Dymensions 2000 by Willowbrook-based CD Dymensions Inc. (www.cd-dymensions.com) offers a PC based on a 300 Mhz chip from Cyrix Inc., 32 megabytes of RAM, a 4.3 gigabyte hard drive and a 4 megabyte video output card.
Jerome Oreluk, president of the company, said, “this price war is driving down the cost of components including microprocessors and video equipment to the point that we expect to be able to offer even more powerful products in the $500-$600 range very soon.”
Although Oreluk acknowledged that the Cyrix 300 Mhz machine lacks some of the pep of the slightly pricier machines with AMD and Intel chips, he noted that it is at least up to the standards of high-end machines that were sold just a year ago.
The other price plummet driving this season is in laptops, where manufacturers also have cut prices drastically even as they have beefed up the computers themselves.
At the lower end are offerings like IBM’s ThinkPad i series where the cheapest model is the 1410 ($1,500) based on the same Intel 266 Mhz MMX chip that was on $5,000 ThinkPads a year ago.
But the big move this year is laptops with far more powerful Pentium IIs that now cost about the same as did last year’s middle-of-the-road desktops.
Matt Dean, chief of laptop marketing for Texas-based Dell Computer Corp., said his company expects record laptop sales this season because people with the sort of income who could afford desktops last year can now acquire an elegant portable for the same price.
Dell’s hot holiday offering is the Inspiron 3500, which at $1,999 includes a 233 Mhz Pentium II processor and a 13.3-inch Active Matrix screen, a built-in 56K modem, 32 megabytes of RAM and a 3.2 gigabyte hard drive.
A $300 add-on gives the machine the ability to play the new DVD (digital video disc) movies as well as traditional computer CD-ROMs and music CDs.
“This DVD feature includes connections that can display movies on your big screen TV at home or, if you’re traveling, on the television set in your hotel room,” Dean said.
“We do see a big potential audience who will want a notebook instead of a desktop to minimize the amount of space it requires (as well as to take advantage of) its portability,” he said.
He added that Dell’s strategy to persuade homeowners to go the laptop route includes a “3-year return-to-depot” warranty that allows a buyer to ship a machine to a Dell repair facility by overnight air for one-day return.
A final fillip aimed at customers is a leasing option of $75 a month for three years.
Pentium II laptops weren’t available last holiday season, but top of the line laptops with the active matrix screens, large hard drives and high-speed modems like on this year’s Inspiron line cost between $3,000 and $4,000.
Pointing to such deals, industry analyst Ablondi said, “Prices suddenly are at a level where people are looking at buying a computer far more casually than they did a year ago.
“For example,” he said, “people see these prices as low enough that they can give them as just another Christmas gift rather than a major purchase for the family.
“People with a computer already at home appear much quicker to buy a second machine for a child’s room or to send off with a college student,” he added.
Also eager to get the sub-$1,000 machines are families that have held off buying their first computer until now.
“It’s a `what-me-worry’ attitude coupled with the entrance of a new class of buyer that will propel this season to an all-time record,” said Ablondi, who did his survey in tandem with the Philadelphia-based research house CENTRIS.
“Senior citizens are planning to buy to get on-line, people who didn’t think they could afford one before are shopping now, as are households that need to replace the PC that went off to college with their student.”
And so an unprecedented 2.3 million families are expected to buy a computer for the first time this year, almost half the 5 million people overall who will add computers over the holidays, Ablondi’s study showed.
With the Consumer Electronics Manufacturers Association estimating that 41 million households now have PCs, the holiday buying spree will put household penetration within clear sight of half the 100 million households in the United States.
Fueling holiday high-technology retailer euphoria is the fact that nearly 25 percent of all computer-owning households now are making at least some use of the Internet, indicating a growing base of sophisticated customers willing to consider a wide range of gadgets to enhance their home computing activities.
Executives at the Best Buy chain point to such computer add-ons as digital cameras, DVD players and multimedia software to allow people to move their home video tapes onto their sub-$1,000 PCs for editing, titling and replay.
It remains to be seen, however, whether IBM and Dell and Dymensions and Circuit City and Microsoft and others among the high-tech dry goods trade can eke their customary fat profits out of this year’s situation.
As Ablondi put it, “When you’ve got the very best companies in this business selling products for so much less than they were getting last year, you’ve got to wonder whether they’ve gone too far.
“When it’s all over, these guys are going to look at their books and wonder if they let the customers leave the store with money in their pockets that they would have spent if they had to.”
He added, “Nobody likes to see the customer leave with money in his pocket.”
Except the customer.
NEW AND IMPROVED ELECTRONICS
Among other holiday gift possibilities:
REDEFINING TV
In most areas of the country, high-definition television remains an idea whose time has yet to come. Still, for those early adopters with unlimited financial resources and patience, it finally will be possible to enlist in the digital revolution, as retailers begin taking orders for first-generation HDTV sets–most of which will be priced from $6,000 to $8,000, slightly below early estimates. Several manufacturers will offer HDTV-compatible monitors and set-top converters, but the models to look for at this early juncture are widescreen Proscan, RCA and Hitachi sets that are fully integrated to receive network and direct-broadcast-satellite digital HDTV signals, as well as current analog broadcasts. The 61-inch Proscan, which will be on display at retailers this month, will cost $7,995, while a 55-inch RCA model is $6,999, with a satellite dish thrown in as well. In Chicago, it remains an open question as to when digital signals finally will be broadcast by local stations.
–Gary Dretzka
CYBERCAM WORKS LIKE A PRO
Recently, Danish filmmaker Thomas Vinterberg shot his award-winning, feature-length black comedy “The Celebration” using a handheld video camera. Now, home-movie buffs can use the same techniques employed by a director celebrated at Cannes, thanks to JVC’s pocket-size digital CyberCam. The $2,000 JVC model (GRDVL9000U) allows amateur auteurs to shoot high-quality pictures and sound, then edit the material digitally during playback through the 4-inch color LCD monitor, using 8 special effects and 17 scene transitions. The features include a 200x digital zoom and 10x optical hyperzoom; video capture software; audio dubbing; motor-drive and snapshot mode, with four-frame display; superlow lux; image stabilization, and direct PC connection and digital output. Individual pictures can be output on an optional high-resolution printer ($599).
–Gary Dretzka
DVD: A STEP UP FROM VCRS
This should be the holiday season when DVD–the digital video disc–comes of age. More than a million players have been sold to retail outlets, and prices have shrunk to levels affordable to most people looking to upgrade from VCRs. To make the format even more attractive to consumers, video chains such as Blockbuster are beginning to rent DVD players, as well as software. Likewise, Divx-enhanced players now are available from RCA, Panasonic, Proscan and Zenith–at prices comparable to open-format players ($399-$549)–and they can play all standard DVD discs and CDs. Thus, even if the pay-per-view Divx format does fail in the marketplace, consumers won’t be stuck with useless hardware.
Deep-pocketed fans of the digital video disc format definitely will want to check out what could prove to be the high-tech toy of the year: Panasonic’s portable DVD player, with a 5.8-inch liquid crystal display, or LCD, screen and stereo speakers. The PalmTheater machine, which weighs 2 pounds and sells for about $1,300, allows movie fans to enjoy the widescreen-video format away from home–thanks to a two-hour, rechargeable battery and headphones–or as an add-on component to their home theater system. With more than 2,000 movie titles available on DVD, this cool gadget provides the perfect remedy for the badly butchered movies offered to passengers on interminable plane flights.
–Gary Dretzka
FLASHBAKE’S NO MICROWAVE
Silicon Valley’s latest contribution to culinary culture is the FlashBake oven, which looks like a microwave but uses light controlled by a microchip to do the cooking. Bill Minnear, chief technology officer of Quadlux, the Fremont, Calif., company that invented the oven, said the main cooking is done in the light spectrum somewhere between a light bulb and sunlight. The microchip controls the cooking time and knows when to zap the food with infrared light for browning.
The principle is different from the microwave, in which water molecules are stirred up and create the heat. Minnear says the oven roasts, bakes, broils and sautes in about half the time of a conventional oven. The new home version, which has a suggested price of $1,600, follows a commercial unit used in restaurants around the country, Minnear said.
Frank Demeron, who oversees the kitchens of 60 Wyndham hotels nationwide, said the oven has gotten good use in the chain’s smaller facilities because it’s versatile. “We cook everything from shrimp au gratin to pizza to buffalo wings in it,” he said. “The browning is phenomenal and you can control how long you cook something from the bottom and how long from the top.”
Another restaurant, Dock’s Great Fish in Chicago, likes the fact that ribs don’t get mushy in the FlashBake the way they do in a microwave. But Larry Pintozzi, manager of purchasing and facilities for Dock’s, said they use the oven for reheating, not cooking.
It’s like having “a really expensive microwave,” he said.
–John Lux
