That Computer Is So You

PC makers used to focus on capability and price. That's changing—and fast—now that consumers want hardware that makes a fashion statement

by Steve Hamm and Jay Greene

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With nearly 3,000 technology companies touting their wares at the annual International Consumer Electronics Show in Las Vegas from Jan. 7 to 10, it's a challenge to stand out from the crowd—even for an industry giant like Microsoft (MSFT). So the software ­behemoth is staging a "fashion show" in which three top style mavens, including Nigel Barker from the TV show America's Next Top Model, will pick their favorites from among a dozen computers.

When it comes to design, rival Apple (AAPL) gets most of the ink, but Microsoft wants to demonstrate that PCs running Windows can turn heads, too. "There's a new bar being set," says Dave Fester, general manager of PC product marketing at Microsoft. "The market is pushing computer makers to do this."

Computers for the Fashion-Forward

PC makers are focusing as never before on turning utilitarian machines into fashion statements, and not just for the young and the hip. Lenovo Group (LNVGY), the world's No. 3 PC maker, is using the Vegas show to promote its expansion from commercial into consumer markets. The company is introducing three splashy notebooks—super-svelte and colorful, with textured covers that make them easy to grip. The lightest, at 2.3 pounds, is aimed at sophisticated, globe-trotting professionals.

Hewlett-Packard (HPQ), the leading consumer PC brand, will hawk such new models as its Blackbird 002, a black-clad desktop gaming PC whose insides, with a copper-piped liquid cooling system, are as pleasing to the eye as the exterior via an easy-to-open side cover. And Netherlands-based Tulip Computers is showing off ultra-high-end notebooks that look like expensive purses and are pitched at wealthy, middle-age women.

Until recently, PCs were viewed by many in the industry as low-margin commodities. What changed? Apple proved with its flashy iPods, iPhones, and MacBook laptops that design really matters to consumers. The company's aura of cool, cultivated masterfully by Chief Executive Steve Jobs, helped increase its PC market share worldwide from 1.8% three years ago to 3.2% now, according to market researcher IDC (IDC). Thanks in part to its high-sheen brand, Apple's operating profit margins top 18%, compared with 6% for Dell (DELL). But other companies are riding the bandwagon successfully as well. HP's accent on design has helped it regain the title of the world's No. 1 PC maker from Dell, which concentrated on run-of-the-mill office machines.

So Long, White Box

Now even Dell has become style-­conscious. Last year it brought out new consumer PCs that came in a choice of eight colors, including bubble-gum pink, yellow, green, and red. And it just introduced its XPS One—an elegant one-piece desktop. "We're in the fashion business. The products we sell increasingly make a statement about who you are," says CEO Michael S. Dell.

That perspective reflects a fundamental shift in who is buying computers today. Corporations and small businesses used to provide the lion's share of the demand. Now the consumer market is exerting a stronger pull on PC makers. Since 2002 the segment has been growing at a blistering pace. Last year consumer PC sales grew 19%, while commercial PC sales grew 11.7%, according to IDC. For much of the PC era, consumer machines made up about one-third of overall sales; today, consumer sales constitute 41% of the total PC market.