Computer makers fret as sales continue to slump


July 22, 2001


It appears that everyone who wants a computer may now have a computer.

The future for personal computer sales looks flat for the near future, industry officials say. U.S. sales of personal computers have fallen for the last three quarters -- the first time that's ever happened, industry watchers say.

Joseph Burke, the chief financial officer of Gateway Inc., says his company -- which sells primarily to the consumer market -- may never see the sales volume it did just a few years ago.

Even Apple Computer, at its annual MacWorld Expo, didn't roll out any real surprises in hardware or software. A company official said that sales reports showed the rush by parents to buy computers for the new school year just doesn't appear to be happening this year.

Only Dell Computer Corp, which has seen both its stock and market share increase this year, appears to be selling more PCs.

Dell has waged a price war among computer makers, and that has pushed profits down as manufacturers have attempted to fight back with even lower prices -- resulting in lower profits.

And sales of new PCs will likely slow further before the release of Microsoft's new operating system, Windows XP, due Oct. 25.

For consumers, it means there may be some great opportunities for buying a new PC -- at a better price.

APPLE NEWS. With cloudy sales forecasts for new PCs, Apple Computer didn't unveil any new, revolutionary products at its MacWorld trade show.

What Apple did unveil were some upgrades and changes to its product line, particularly PowerMacs and the iMac lineup.

Apple discontinued its slowest iMac, which makes the 500 MHz version the ``entry level'' machine. It features a CD-RW drive and is list priced at $999.

The power-packed ``QuickSilver'' PowerMac G4 lineup will be available in three configurations -- from 733 MHz to dual 800 MHz processors.

Apple also released its first update to the OS X operating system, though the amount of software that takes advantage of its multimedia and multitasking capabilities remains limited. More software companies -- including Microsoft -- have OS X-specific software in the works.

Are you using Mac OS X? If you are, why not put your thoughts about it in an e-mail and send them to the address at the end of this column. I haven't talked to anyone who is running OS X, and the other Macintosh faithful want to hear some real-world reports.

ON BRITANNICA. It only goes to show you that you can't make money if you give away the product that once generated all your revenue.

The Encyclopedia Britannica announced earlier this year it would once again be printing its multi-volume encyclopedia to sell to universities, libraries and consumers. It also announced plans to end free Internet access to its vast storehouse of information.

The new will continue to offer free information, though the free content will be very limited in nature. Britannica's Internet guide will remain free, and the company is promising a new ``quick facts'' encyclopedia will debut later this year for free.

What won't be free any longer is access to the full articles on the company's Web site. A $5 per month subscription fee will get you in on the detailed information, and will include a video database and later on, specialized content for students in grades five through nine. went online in 1994, and at one point tried charging Web surfers for access to its articles. When that business model failed, the company switched to an advertising-supported business model that hit hard times after the dot-com bubble burst last year, and the value of Internet ads dropped like a rock.

Nevertheless, has remained one of the Web's most popular spots for folks seeking information.

For more about the subscription service, visit .

NAPSTER FALLOUT. While the courts, recording industry and Napster wrangle over copyright infringement, the swapping of music files -- both copyrighted and not -- continues unabated.

While the focus has been on Napster, most of its users have left en masse for other services like iMesh, Napigator, Lime Wire, Bodetella (which accesses the Gnutella file-sharing network) and Audiogalaxy.

As the free-music market splinters, the recording industry will next need to track down and identify these services and get them to submit to the law as Napster has -- or face a legal battle they may have trouble winning.

With many of these services based outside the United States, it may be a tougher job than going after Napster.

In the meantime, Napster has created a new proprietary digital music format called .nap, which it will use to prevent users from swapping copyright-protected music files.

Music files will be converted from the popular MP3 file format to the .nap file format before they will be transferred on Napster.

A beta version of the new Napster software will be available soon. Check for details at

Comments and questions about this column may be sent to, or visit on the World Wide Web.

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