Amid slowdown, PC vendors need to adapt, Via says

Worldwide PC sales may have resumed growth in 2002, according to figures from Gartner Inc.’s Dataquest unit, but it’s still too early to predict that PC demand among corporate customers will see an upturn in 2003, an executive for Via Technologies Inc. said here Tuesday.

“It’s far too early to say that,” said Richard Brown, Via’s associate vice president of marketing.

Part of the problem, alongside a continuing economic slowdown in many markets, is that new PCs offer very little in the way of innovation or increased value compared with the PCs currently found on the desks of corporate executives. “There’s less excitement, particularly about the whitebox PC,” Brown said.

That lack of excitement has also affected replacement sales among home users, Brown said. To overcome this obstacle, PC vendors need to put less emphasis on upgrades and replacement PCs. Instead, vendors should target demand for multiple home PCs and develop PCs that can meet demand for wireless networking and digital media applications, such as DVD and MP3 playback, he said.

“People who already have PCs want to buy more PCs,” Brown said, citing a survey conducted on Via’s Web site which found that 70 percent of existing PC users are looking to buy an additional home PC. “Demand is not particularly in upgrades.”

PC vendors that do try to reach into this market for additional home computers need to consider carefully the types of products that they offer.

“These PCs need to be very different to (existing) whitebox PCs,” Brown said. Attractive design, quieter operation and lower power consumption are all important, he said.

That’s where Via hopes to see demand grow for its C3 and Eden microprocessors. Primarily a provider of chipsets — the chips that connect a PC’s processor with other system components, such as memory, hard disks and a graphics card — Via is trying to become a provider of a wider range of PC components, offering audio chips, graphics chips and motherboards in addition to microprocessors.

Via has tried to differentiate C3 from the products of larger rivals Intel Corp. and Advanced Micro Devices Inc., which offer higher clock speeds and more performance, by emphasizing the C3’s low power consumption and ability to operate in certain systems without a cooling fan, reducing the amount of noise produced.

“Noise is one of the biggest complaints we get,” Brown said, emphasizing the importance of silent operation in some computing environments, such as home entertainment systems, which are commonly used in living rooms.

Price is another factor that Via hopes can help the low-cost C3 make inroads into systems from more vendors. “It’s no good rolling out a US$2,000 home entertainment system or $2,000 notebooks,” Brown said, citing stronger consumer demand for cheaper PCs.

One of the few PC makers to take advantage of the C3’s low cost is Microtel Computer Systems Inc., which sells its SYSMAR 710 PC at for a list price of $199.86.

One of the cheapest retail PCs available, the SYSMAR 710 comes with the LindowsOS operating system from Inc. and includes an 800MHz C3 processor, 128M bytes of SDRAM (synchronous dynamic RAM), a 10G-byte hard drive, and a CD-ROM drive. It does not include a monitor, modem, or floppy disk drive.

While the Microtel PC was initially expected to appeal primarily to consumer users, companies have also warmed to the low-cost desktop. “Most of the sales are to major corporate customers,” Brown said.

Despite the challenges that lie ahead, Brown sees plenty of opportunity for PC companies that can take advantage of growing demand for non-traditional PC applications. “This year is going to be very tough … but at the same time, I’m very optimistic.”