Penetration saturation means the PC suneeze is on – ST

Tobi Elkin

As household personal computer penetration begins to nudge past the 50% mark and sub-$ 1,000 models are no longer a novelty, given the onslaught of sub-$500 models and even freebies, PC marketers are having a tougher time making money as the category plunges farther into commoditization.

Eclipsed by direct marketers Dell and Gateway, “non-direct” PC vendors will continue to struggle over how to go quasi-direct by cutting costs, negotiating better sourcing deals and streamlining manufacturing. They’ll also look to mount successful e-commerce efforts without alienating their retail partners, leverage Internet portals and generate other revenue streams. It’s been no fun being a box maker and only Apple, buoyed by several profitable quarters in a row, has successfully reinvented itself with the “Think Different” campaign. Apple’s effort, via TBWA/Chiat Day, Playa del Rey, Calif., struck a chord with consumers and its style-based iMac still has rival PC marketers scrambling to catch-up.

While PC marketers have tried to put the focus back on fully featured multimedia desktops and notebook PCs, which fetch higher margins, these machines don’t drive sales volume.

Magic price points remain important, and the sub-$ 1,000 segment continues to rule.

Hewlett-Packard’s “Expanding Possibilities” initiative, now in its second year, has positioned H-P as a more consumer-friendly technology company with an array of goods: printers, toner cartridges, Internet services, digital cameras, you name it. The effect is noticeable via print ads, TV, new packaging and sports sponsorships.

Dell, with new agency Ammirati Puris Lintas, New York, continues to refine its “direct” image.

Gateway’s exhortation to “Call, Click or Come In” aims to reach consumers through multiple channels.


Co. Name, Location


1 Microsoft Windows Microsoft , Redmond, WA

2 NetWare Novell, Orem, UT

3 McAfee VirusScan Network Assoc., Santa Clara, CA

4 Adobe, PageMaker, etc. Adobe Systems, San Jose, CA

5 AutoDesk, AutoCad AutoDesk San Rafael, CA


1 IBM IBM, Armonk, NY

2 Hewlett-Packard Hewlett-Packard, Palo Alto, CA

3 Compaq Compaq Computer, Houston

4 Intel Intel, Santa Clara, CA

5 Dell Dell Computer, Round Rock, TX

6 Sun Microsystems Sun Microsystems, Mt. View, CA

7 Cisco Systems Cisco Systems, San Jose, CA

8 Gateway Gateway, N. Sioux City, SD

9 Unisys Unisys, Blue Bell, PA

10 Apple Apple Computer, Cupertino, CA


Lead Agency, Location (billions)


1 Microsoft Windows Wieden, Portland, OR; Anderson, S.F. $14.40

2 NetWare Young & Rubicam, San Francisco $1.08

3 McAfee VirusScan Think New Ideas, Los Angeles $0.99

4 Adobe, PageMaker, etc. Young & Rubicam, San Francisco $0.89

5 AutoDesk, AutoCad Winkler Advertising, San Franco $0.74


1 1DM Ogilvy & Mather, New York $81.6

2 Hewlett-Packard Various $47.0

3 Compaq DDB, New York $31.1

4 Intel Messner Vetere, New York $26.2

5 Dell Ammirati. New York; BBDO, New York $18.2

6 Sun Microsystems Lowe, San Francisco $9.7

7 Cisco Systems Goldberg Moser O’Neill, San Franciso $8.4

8 Gateway McCann-Erickson, New York $7.4

9 Unisys Bozell, New York $7.2

10 Apple TBWN/Chiat Day, playa del Rey, CA $5.9




1 Microsoft Windows $194.9

2 NetWare $6.4

3 McAfee VirusScan $8.8

4 Adobe, PageMaker, etc. $6.4

5 AutoDesk, AutoCad $1.1


1 1DM $306.5

2 Hewlett-Packard $89.8

3 Compaq $144.7

4 Intel $106.0

5 Dell $94.4

6 Sun Microsystems $32.4

7 Cisco Systems $13.7

8 Gateway $183.2

9 Unisys $14.0

10 Apple $81.3

Sources: Annual reports (sales), Competitive Media Reporting

(expenditures), 1998 figures

COPYRIGHT 1999 BPI Communications, Inc.

COPYRIGHT 2000 Gale Group

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