Toshiba has made its first foray into the desktop market as a first step to cashing in on the Net PC trend. Its move away from its notebook-only business will bring it into head-to-head conflict with Compaq, whose resellers it plans to target.
Toshiba said it has begun investigating the viability of Net PCs, the stripped-down PC specification pushed by Microsoft and Intel as an alternative to network computers. Although its products, launched this week, are not Net PCs, they are aimed at the market for low cost, relatively non-complex machines. Toshiba said it has Net PC technology there and is just waiting for growth in customer demand.
The launch of four desktops today is the first step in Toshiba?s strategy to capture a slice of the PC mid-market, where it believes the bulk of the UK business sits, and where the Net PC is likely to make most impact.
?It?s the first time where I?ve seen that the future is getting simpler in the PC market, rather than more complex,? said Howard Seabrook, desktop business manager, of the company?s PC division. ?But network computers are still in their infancy and don?t think they will be available between now and the end of the year. There won?t be any volume.? Toshiba is not looking for huge profits from the tight margins of the midrange PC market, where it will compete largely on price. The real incentives, as Seabrook pointed out, are access to the 80 per cent of the UK market still represented by desktops, and a springboard into the Net PC space.
?We are not looking for high profit generation, it?s volume driven,? said Seabrook. ?We want to be number three in PCs worldwide by the year 2000 and we are trying to get into the market by selling high volume at the lowest price,? said Murray McKerlie, portable business manager of the PC division.
. The company sells one in five of the notebooks shipped in the UK and has a 10 per cent share of the total UK PC market. Over the next year it aims to snatch an extra 1.5 per cent share on the back of the move into desktops. This will move it up the pecking order towards market leader Compaq, which has around 16 per cent of the total market. However, analysts believe its goal to be number three overall by 2000 is over ambitious.
One of Toshiba?s plans is to exploit Compaq?s recent tensions with its resellers over the giant?s plans to sell direct to certain sectors. ?There are some people who are so pissed off with Compaq that they think ?I?m going to take Toshiba?,? claimed Seabrook.
Toshiba sells only through resellers and Seabrook stressed that this strategy would not change. Good reseller relationships are essential to give customers full services, and these will be threatened by any move to a direct model. ?They are in the business to make money. Whatever stops them from making money irritates them, particularly if they see business they see as rightfully theirs going back to the manufacturer. Then they will bitch and carp,? Seabrook said. ?The Japanese way is to do what we are good at and leave other to do what they are good at - we have no plans to go direct,? he added.
The firm has 110 resellers but plans to recruit more for the new desktops, particularly targeting disgruntled Compaq Vars.
Seabrook believes Toshiba?s high profile consumer brand will help win it customers in the small and medium enterprise space. ?In a well organised large company with a good IT strategy, the company will take in new products over six to 24 months,? he said. ?Other customers who don?t have such a structure will think, I bought a good Toshiba VCR so I?ll try their other products.? The firm also launched eight new notebooks, one - Portegee - the size of a small book with CD capacity. ?Nobody is doing what we do because we have access to partnerships that other firms don?t have,? said McKerlie. ?We have good partnerships with Microsoft, Intel, Siemens and IBM.?
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