Michael Capellas, Compaq chief executive, said this morning that his company will develop a new type of simplified, Internet connected personal computer to help it win back market share from Dell Computer.
Latest PC shipment figures from Dataquest show Compaq is struggling against direct seller Dell in the US market, although Compaq remains ahead in Europe.
"Undeniably Dell has gained maket share. We certainly have noticed these guys in Austin do exist," Capellas said during a question and answer session at the start of day two of the Gartner Group Symposium in Cannes.
But Compaq will fight back against Dell not by copying its direct sales model, but by developing new simpler PCs, according to Capellas.
"If you believe ecommerce and what's happening, then distribution alone is no longer a compelling valuation. So what becomes a compelling valuation? Complexity is the enemy. Where we will regain share is to say we want to remake the whole market," he said.
Capellas cited three of Compaq's latest products as ones that were moving in this 'simple to use' direction, the M300 laptop, the M700 and its just announced handheld cellular device. Last week the company said it would announce two diskless products next month.
"I believe the next generation we will completely redefine the personal computer with a new design and the price point will go down. Once we get to the point of product leadership, you'll see us be very competitive on distribution," he said.
High power PCs will be of value only to certain segments of the market, Capellas said, but the low end alternative is not a network computer in the sense of the dumb terminal once touted by Oracle's Larry Ellison.
"That's a dumb term that I don't believe is that real," said Capellas.
The new generation of desktop computing device from Compaq will be an intelligent device, with an advanced user interface, much easier to attach to the network and simple to manage, said Capellas.
"Is this a product announcement?" asked interviewing Gartner Group analyst Michael Gartenberg.
"No it's a statement of direction," replied Capellas. "But I wouldn't be so bold if I hadn't seen the product designs already."
Figures from Dataquest last month showed that Dell had knocked Compaq off the number one spot in the US PC market for the first time. Dell's market share surged to 17.1 per cent, from 13.4 per cent a year earlier, compared to Compaq's 15.3 per cent, up slightly from 15 per cent a year earlier.
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