Word: pcs
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...personal-computer industry's most savage shake-out ever. Squeezed by falling demand on one hand and a destructive price war on the other, PC makers are realizing their worst nightmare: their once exotic, high-technology products have become little more than cheap, interchangeable commodities. Since the PCs all use basically identical hardware, consumers are no longer picky about what brand of computer they buy so long as the price is right. The result: retail prices are falling an average of 8% every three months. A fully loaded IBM PS/1 computer with the latest hardware typically sells...
...small companies that function more as assembly lines than as manufacturers. Many of these firms, ; such as Zeos, Graystar and PC Brand, don't invest in costly research or development, nor do they own expensive manufacturing plants. Instead they operate out of factories and garages. Rather than make PCs from scratch, they buy everything from circuit boards, displays and disk drives to entire computers from foreign firms that largely copy American PC designs. Says Brad Smith, vice president of PC research at Dataquest: "All you need to start a PC company today is a fax machine to take orders...
...which will be to the advantage of the U.S. As the PC has changed from a magic black box to a run-of-the-mill commodity like a television set or a radio, so has the economics of the business. Since there is no mystery to the technology, PCs can be manufactured as well as priced like any other commodity. That fact has helped make computers a more global business, but it has also played into the hands of copycat, low-cost producers: up to 75% of the internal components are imported...
...once seemed an apt metaphor: for much of the 1980s, the unit was really lost in the woods. It was expected to lead AT&T's charge into the computer business, but its microchips sold poorly because they were overpriced, and the company's first commercial computers -- from PCs to a midsize system -- were flops. With losses topping $3 billion, AT&T was forced to pull back from the market. Says William Warwick, president of AT&T Microelectronics: "We were naive. We thought our name and reputation would open doors. They didn't; we learned a very painful lesson...
...collect enormous revenues by licensing its software design to office-equipment vendors that will make the new machines that run the Microsoft At Work system. The combined sales of copiers, printers, telephones and fax machines, for instance, topped $60 billion last year, in contrast to $38 billion for PCs. Analysts project that Microsoft could generate at least $200 million in royalties from those licenses by the year 2001. While some devices will be rolled out within six months, most won't be on the market for at least another year...