Compaq mimics Apple with iPaq

In a clear case of trying to ride the coat tales of the popularity of the Apple iMac computer, Compaq Computer this week launched iPaq, the company’s first attempt at entering the new market for Web appliances. The first iPaq will initially be sold mostly to corporate customers for $499 and is built around a 500 MHz Celeron processor. The machine weights just 10 pounds and is less than half the size of a standard PC, while featuring an innovative systems design. Three additional versions of the machine, including a consumer model, are scheduled for release in the next couple of months. Some will be using Pentium III chips. Many similar Web appliances are expected to be launched at the upcoming 20th anniversary Comdex show next week in Las Vegas.

Compaq hope the new device will help the firm compete more effectively with Dell and others. ''This is a step in the company's plan to redefine Internet access,'' said Compaq CEO Michael Capellas. ''There is a need for simpler, task-specific PCs. We are offering a simpler computer with great design that takes a lot of complexity out of the personal computer.'' The iPaq is an Internet-access device designed as a desk-side computer that can replace full-featured office desktop PCs. Capellas said he estimates that about 15 to 20 percent of the total volume of corporate PCs shipped within a year would be for Web-appliance computers. ''We think it can grow to 50 or 60 percent over the next two to three years."

If so, analysts were quick to point out, Compaq would give shareholders yet another reason to sell, as Compaq would stand to lose a lot more than it may gain. Profits from the sale of any PC device in the $500 range are slim at best. Compaq officials explained that most corporate workers don’t use a large portion of the typical features and system resources in a standard desktop PC. By identifying and eliminating those features and resources that are least used, Compaq hopes to be able to create a market for these "almost computers." The iPaq will be shipping in volume in January. Orders can be placed on Compaq’s Web site now.