Andrea Orr
PALO ALTO: As the computer industry descends upon Las Vegas this week for its
annual Comdex trade show, it could find the mood less festive than in years past
when everyone from hard-core geeks to low-tech investors celebrated all the
latest innovations.
This year, investors are dismayed by the returns from high-tech stocks, and
many computer company insiders confess to being concerned about being able to
sustain the kind of dizzying growth the industry has enjoyed for so many years.
After several months of mounting concerns over a personal computer sales
slowdown and the failures of several Internet companies, the Comdex show kicks
off at a particularly rocky time for the industry.
Just last week, Dell Computer Corp., long an industry leader and a star of
the Comdex show, warned that its 2001 sales growth would slow to around 20 per
cent. This is well below the historical growth rates of 50 per cent that made
Dell a leading stock throughout much of the 1990s.
Other companies are under similar pressure. On Friday, the tech-heavy Nasdaq
stock index, which had soared last year largely on the good times in the
computer and Internet industries, dropped to within $2 of its low for the year.
"This year the tech economy and the dotcoms have put a real damper on
the industry," said Tim Bajarin, an analyst at the technologies firm,
Creative Strategies in San Jose, Calif. "Last year, everybody had dollar
signs in their eyes."
Few people are blaming the computer companies themselves for the slowdown.
The industry is continuing to innovate like crazy, and this year it is expected
to show off a lot of new portable and wireless devices that make it easier to
connect to the Internet anytime, anywhere.
The question is whether consumers will take to this latest generation of
gadgets the way they did to the plain old PC. The concern is that after years of
producing wildly popular machines that revolutionized the way people lived and
worked, the industry is increasingly turning out more marginal items that may
appeal to only a niche market.
Companies could be in the odd position of being victimized by their own
success if consumers are so happy with the speed and performance of their
current machines that they no longer see a need to upgrade.
"Sales growth numbers seem to bear out that upgrades contribute a lot to
revenues," explains Steve DelBianco of the Association for Competitive
Technology, a Washington, DC-based trade association for small and emerging
technologies. "But why upgrade if you are perfectly happy with your current
computer?"
Adds Rob Enderle, an analyst for Giga Information Group: "The PC market
has stalled rather badly. So right now, the industry is looking for anything
that will get people excited. We're not seeing the kind of revenues we've seen
in previous years and the industry is getting nervous."
At the same time, the industry is not abandoning its core product, the PC, as
the best hope for continued growth. For years, the thinking was that the PC
could become obsolete as consumers took to small palm devices and even wearable
computers. Now the PC is being regarded more as an essential platform that can
be accessorized with other devices.
So this year, much of the focus will be on more versatile computers that
serve as both portable and permanent devices. IBM is expected to show off a
"modular computer" - a compact device that contains the brains of an
entire computer so consumers can carry it with them and, depending on their
needs, connect it either to a laptop or a full-sized PC.
Similarly, Microsoft Corp. is expected to show off a tablet-like PC that is
even smaller than current laptops, yet functions more like a full-sized computer
than a palm device.
Attention will also be focused on Transmeta Corp., whose low-power computer
chips promise to keep laptop computer batteries running for hours longer,
significantly improving their performances.
And, there is a new wireless technology known as Bluetooth that is also
receiving a lot of buzz. The technology, which was originally developed by a
consortium of computer and software companies in 1998, synchronizes information
from disparate devices. like a cell phone and a PC, so they can connect without
cables.
Some of the first products based on the Bluetooth technology are expected to
be on display on the Comdex floor.
(C) Reuters Limited 2000.