With the slumping U.S. economy having slowed computer sales, some PC manufacturers are launching innovative marketing campaigns to help persuade shoppers to buy new machines. Some analysts say now is a good time for schools to buy, too.
Overall, computer prices have dropped dramatically. And now both Compaq Computer Corp. and IBM Corp. have announced new financing plans that allow customers to defer payments for at least three months for a limited time.
Compaq’s new four-month deferral plan applies to leases on all of the company’s products and services, including servers, handhelds, wireless devices, PCs, storage solutions, and service agreements. Customers make no payments for the first four months of the lease term, followed by 20, 32, or 44 monthly payments. The offer is effective until December 31.
IBM’s 90-day payment deferral plan also is effective through December 31, but it applies only to transactions of $50,000 or more.
“Clearly, computer manufacturers have been hit by the downturn in the market,” said Peter Grunwald, president of Grunwald Associates, an educational technology research and consulting firm. “There is some saturation, too.”
PC shipments have declined 11.6 percent compared to this time last year, according to preliminary results from Dataquest Inc., a unit of Gartner Group.
“In the third quarter, the PC market continued to suffer from the impact of PC saturation in developed markets, and the effects of the U.S. economic downturn came heavily to bear on all PC regions,” said Charles Smulders, vice president of Dataquest’s Computing Platforms Worldwide group, in a statement.
Despite lagging PC shipments experienced by several top computer vendors, Dell Computer Corp. managed to grow 10.8 percent in its last fiscal quarter. While Dell saw a quick return to business after the events of Sept. 11, Compaq estimated that these events resulted in 300,000 fewer units sold in the United States, Dataquest said.
Apple Computer also reported growth in its last quarter, which the company attributed to strong education sales. Of the 850,000 computers Apple sold in its last quarter, 350,000 were bought by education customers.
“We accomplished a lot in [fiscal year] 2001, even though it was a challenging year for us and our industry,” Apple Chief Executive Officer Steve Jobs said in a statement. “We gained market share in education, and iBook sales to education tripled last quarter; we launched Mac OS X and released the stunningly fast 10.1 update in September; we opened our first Apple retail stores and are on track to open 25 stores across the U.S. by the end of 2001.”
Grunwald said Dell and Apple have succeeded in these hard economic times because of their innovative strategies. “Apple has reinforced its position as an innovator in both ease of use and computing power,” he said.
Dellwhich doesn’t make its computers until customers orders them onlinehas an attractive, economical approach because it doesn’t invest as much in infrastructure as other computer companies, Grunwald said.
Compaq continued to suffer from competition in its supply chain, as well as uncertain reaction to its announced merger with Hewlett-Packard, Smulders said.
“HP experienced its slowest growth for worldwide shipments since the first quarter of 1997. As with Compaq, HP’s strong dependency on the U.S. home market is taking a great toll on its overall performance,” Smulders said.
Because computers are so fast now, PC vendors are having a hard time getting users to upgrade their systems. “Hardware performance has leapt ahead of most common software requirements, which provides the opportunity for users to extend their PC life cycles,” Smulders said.
The economic downturn also has reduced the need for computers as companies lay off staff, fewer businesses are created, and transfers between companies slow down.
“The one area of hope for vendors was the back-to-school business, but early indications show that this area was also performing weakly,” Smulders said.
Although now is a good time for schools to buy computers because of low prices and attractive incentives, Grunwald said some schools should be aware that new computers most likely will come preloaded with Microsoft Windows XP.
“It’s probably a good idea to wait a couple of weeks for the Windows XP shakeout,” Grunwald said. “It pays to wait a little while for any new bugs of any new operating system to get identified and fixed.”
Grunwald believes low prices and attractive incentives will increase the number of computers sold, helping to narrow the digital divide. Consequently, more computer users will pressure internet companies to provide better-quality content online.
“Ultimately, we think what is happening in the computer market is going to impact what’s happening on the internet,” he said.
Compaq Computer Corp.
Apple Computer Inc.
Dell Computer Corp.