Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, August 17, 1993 TAG: 9308170022
SECTION: BUSINESS PAGE: B6 EDITION: METRO
SOURCE: Associated Press
DATELINE: PLANO, TEXAS LENGTH: Medium
But with demand for personal computers changing, EDS, a subsidiary of General Motors Corp., has decided it's easier and more profitable to build the small but increasingly powerful machines than buy from manufacturers.
Now EDS is planning to mass market a low-priced PC based on Intel's 486 chip, blurring the line between computer service and hardware providers.
"We have plans to offer them to the general public. We also have plans to offer them to existing and future EDS customers as kind of a private, house-brand label," said Kim Luke, program manager for the company's military systems division.
The company's anticipated annual production of 30,000 to 50,000 is tiny compared to the nation's largest PC makers. International Business Machines Corp. will sell an estimated 4 million PCs this year, Apple Computer Inc. 3 million and Compaq Computer Corp. 2.4 million.
Nonetheless, the move reflects "the ultimate commoditization of the PC industry," said Stephen McClellan, analyst at Merrill Lynch in San Francisco.
"When companies like EDS, which are decent distributor-type companies . . . can assemble and ship a PC and even make a small profit margin on it, I guess almost anyone can do it," McClellan said.
The company does not expect to sell its PC in stores, but is considering direct mail, Luke said.
"We really don't plan to go out there and try to sell our product against an IBM or against a Dell, that kind of a public offering. That is not really what our direction was," Luke said.
"What we're talking about here isn't anything radically new, except that we're looking at having these house-brand PCs in addition to our standard systems," he said.
The move grows out of the company's assembly of PCs for a five-year, $710 million Defense Department contract. It recently began selling the machines through NATO and to federal employees.
"We want to add to that and then supplement it," Luke said. But "we just don't see it as hundreds of thousands of systems a year."
Since its start 30 years ago, EDS has distinguished itself by pulling together computers and programs made by many different companies in systems customized for clients. Luke said the company's own PC plans won't change that.
"The philosophy of vendor independence is something that's written in stone. That will not be changing, no matter what," he said.
"We still want to make our customer requirements a driving force behind any technological design. It's just that we have customers who have requirements that you can't buy a cookie-cutter system to meet."
EDS's foray into production bucks a trend among several large hardware companies, notably IBM and Unisys Corp., which have beefed up their services business.
It also comes as the PC industry is undergoing a consolidation driven by cutthroat discounting. Many smaller companies have left the business and some larger ones have joined with others in partnerships in order to survive.
"I hope they've done their homework," said Bonnie Digrius, an analyst with Gartner Group, a market research firm in Stamford, Conn.
by CNB