April 12, 2000 5:25 PM PDT

IBM sets launch date for NetVista PCs

IBM will begin taking orders for its new NetVista PC at the end of April and expects to ship the first orders to customers by mid-May.

The Armonk, N.Y.-based computer maker unveiled the PC line last month as part of an ongoing effort to revitalize its struggling personal systems group.

NetVista, which first will be available in a sleek all-in-one dark gray model built around a 15-inch flat-panel display, will be the first test of IBM's wherewithal to get its PC business back on track, said Roger Kay, an International Data Corp. (IDC) analyst.

"This is the first shot in the NetVista campaign, and with this, IBM has its best foot forward," he said. "This product is one of the more exciting ones IBM has had in recent history, and it compares favorably with similar products out there."

Although IBM has done well selling notebooks and servers, Big Blue's PC business has floundered under the weight of inefficient manufacturing and distribution, and dull designs haven't helped. But NetVista "is IBM's chance to reclaim some leadership in PCs," according to Lindy Lesperance, an analyst at Technology Business Research.

IBM's personal systems revenue grew 19.7 percent in 1999 over 1998, in part because of the success of ThinkPad portables and Netfinity servers. The results are a stark improvement over 1998, when personal systems revenue declined 10.9 percent for a loss of $992 million.

Big Blue has put aside $100 million to promote NetVista, and it will need to spend every penny, analysts say. IBM's decision to return to direct sales from retail significantly hurt its market position during the fourth quarter. The company saw PC shipments decline 29 percent in the United States and 7 percent worldwide, according to IDC.

"IBM is paying the price for literally overnight going direct and with almost no transition," said IDC analyst John Brown. "The test will be execution on direct sales."

The first of the four NetVista models will be sold directly or through some IBM dealers but not at retail. The second model, shedding legacy serial and parallel ports in favor of USB, is expected to ship in the third quarter. Fidelity Investments and other service providers will offer the third model, an Internet appliance, to their customers. The last model, a network computer, is set to ship soon after the legacy-free NetVista.

IBM is expected to begin selling the NetVista all-in-one the week of April 24 and will ship the first orders about two weeks later. Seven basic configurations will be available, with entry-level models packing either a 533-MHz Celeron processor or 600-MHz Pentium III chip, 64MB of RAM, storage up to 20GB, a CD-ROM or DVD drive, seven USB ports, a 15-inch display and Windows 98 Second Edition.

IBM has not set a price, which could "literally change the day before the company starts taking orders," said a source familiar with the PC. Entry-level models are expected to sell well below $2,000.

IBM will continue to sell existing consumer and commercial models for a time, but the company plans to eventually transition customers to NetVista. One reason is cheaper manufacturing and distribution.

NetVista all-in-one, for example, is a drastic departure from how IBM and many of its competitors produce PCs. Rather than design and build separate commercial and consumer models, like it does with Aptiva and IBM PC, Big Blue hopes to cut manufacturing costs by producing one basic model.

There will be differences--the consumer model, for example, features a different keyboard with more programmable keys and two additional USB ports--but overall, the consumer and commercial all-in-one systems are identical.

"In that sense there is a bit of cost savings," Kay said. "It is certainly more efficient than the older approach."

The NetVista all-in-one, which measures a scant 16-by-16-by-10 inches, is about 75 percent smaller than typical computers. The smaller size means other potential cost savings, such as the ability to pack more units on pallets for shipping overseas.

To jump-start interest in the NetVista all-in-one, IBM is offering a Web sweepstakes in which entrants have a chance to win the new PC.

 

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