July 10, 2000 2:10 PM PDT

Color craze fades as Compaq yanks its stylish PC

Is cool out at Compaq Computer?

When Compaq introduced the Presario 3500 in October, the sleek, new, dark blue consumer PC followed CEO Michael Capellas' edict to "make it cool."

Eight months later, Compaq has quietly pulled the Presario 3500, which will still be sold in Japan but nowhere else.

The demise of the stylish PC, decked out in a magnetic blue case and sporting an LCD flat-panel display and speakers, comes as rival Dell Computer pulls the plug on its colorful WebPC.

Both systems were heralded as a response to Apple's distinctive iMac, the all-in-one machine generally credited with reinvigorating the company.

But consumers weren't buying similarly style-conscious PCs, which generally cost more than plain PCs and offered less value.

The "Sharper Image" set and second-PC buyers Compaq hoped would flock to the stylish Presario didn't take to the system. Changing buying habits--performance over style--led to the Presario 3500s demise, say analysts.

"The problem is the pendulum is swinging back to performance and buying as much as you can afford versus buying something that is cool," said PC Data analyst Stephen Baker.

PC makers failed to recognize how important PCs have become to consumers and that features simply matter more than style. "That's not to say some design isn't terrible," Baker said. "But people are more interested in value."

Mike Larson, general manager of Compaq's consumer division, acknowledged the Houston-based company had pulled the Presario 3500, except in Japan, "where it is a strong seller." But he would not otherwise comment on the system's demise.

Style may sell in Japan, but increasingly less so in North America, say analysts.

"First and foremost, consumers are concerned more about what they're getting in the box and the price point, with style being a secondary issue," said Technology Business Research analyst Lindy Lesperance.

Lesperance predicted the fashion-forward trend ushered in by Apple is quickly fading, as evidenced by slowing iMac sales.

Baker agreed, pointing out the Presario 3500's LCD display priced it out of range for most consumers

"The problem is the things that make these systems sleek and beautiful--that is the LCD display--also make them more expensive and give you much less for the money," he said.

The Presario 3500's demise comes as IBM bets much of its future on the new NetVista line, which features, among other models, the all-in-one X40 built around an LCD display.

"The price points for the all-in-one still seem out to the ballpark in terms of what the consumer is willing to pay," Lesperance said, adding that consumers could buy a comparably featured system without a standard CRT monitor for about $1,000 less than the NetVista X40.

Baker said these types of systems would remain niche products until the flat-panel monitors came in line with CRT prices.

"As long as I can spend 400 bucks and get a 19-inch monitor--at a reasonable price from a pretty good company--$1,000 for a 15-inch (LCD) monitor doesn't make a lot of sense," Baker said.

 

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