IBM Stands by Its PC Alternative

REMEMBER THE NETWORK COMPUTER? About 18 months ago, techdom was buzzing about these ultracheap, diskless alternatives to the personal computer that, when tethered to a network, would cost half as much to operate. Despite the potential savings and such heavyweight backers as IBM (IBM), Sun Microsystems (SUNW), and Oracle (ORCL), most customers didn't buy in. Now, with PC prices sliding to $1,000 or even lower, the hype around NCs has died down.

At least one manufacturer, however, is quietly keeping the faith. IBM continues to aggressively market network computers and has recently cut two big deals--one with food-service giant Sysco Corp. (SYY), the other with insurer American General Finance Inc.--for a total of nearly 15,000 machines. The companies plan to use the devices, which start at $499, in place of terminals hooked into powerful IBM server computers. International Data Corp. says a total of 507,000 network computers have been sold--analysts estimate that IBM has shipped about 250,000 of those.

IBM may have almost half of the NC market, but it still sells a lot more PCs. On Christmas day, Dow Chemical Co. announced that it will spend over $90 million over the next three years to lease 37,500 PCs from IBM. IDC estimates IBM shipped nearly 6 million desktop PCs in 1998.

By Ira Sager


Updated Jan. 7, 1999 by bwwebmaster
Copyright 1999, Bloomberg L.P.
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