IBM to launch new range to revive ailing PC operation

INTERNATIONAL BUSINESS Machines, the leading computer maker, will unveil business personal computers with new designs and a new brand in the first half of 2000 to try to revive its money-losing PC unit.

The desktop PCs - code-named Eon - will be the first models of the new brand. One will be encased in a flat-screen display and will cost $500 (pounds 310) to $1,000, IBM said.

IBM's PC unit lost almost $1bn last year and racked up $311m pre-tax losses in the first nine months of 1999.

The new brand is the latest step in the company's effort to revitalise the business. Last month IBM said it would stop selling consumer PCs through US retailers and focus on online sales. The business models "are an attempt to put some sparkle into the brand and generate revenue growth," said Roger Kay, an analyst at Massachusetts researcher International Data Corp. IBM will unveil an advertising campaign costing more than $100m to accompany the spring introduction of three new desktop PCs, the company said.

While competitors have restyled PCs with new brand names, IBM has stuck with "PC" followed by a model number. "There was a hole in the brand," Mr Kay said.

IBM has lost some of the cachet it commanded when it created the mass market for PCs in the early 1980s. IBM, the fifth-largest PC maker in the US in the third quarter, raised its shipments by only 6 per cent on a year earlier. Overall, PC makers' shipments jumped 24 per cent in the quarter.

The all-in-one flat-panel PC could prove especially popular at less than $1,000, Mr Kay said. "That would be like pulling a rabbit out of a hat. People want the flat panels - they're better in every way except price." The flat-panel model will use parts from desktop PCs, which are cheaper than the notebook components used in rivals' models, IBM said.

IBM may have trouble keeping up with demand because flat panels will be in short supply until 2001, Mr Kay said.

The new PCs will be smaller, slimmer and lighter and come in different colours, Mr Kay said. They will include automatic links to the Internet and chat groups and to an IBM centre where computer questions can be answered and software updated. The notebooks will link wirelessly to corporate networks and communicate with devices such as hand-held computers and Mobile phones.

IBM shares fell $15/16 to $901/4 on Friday.