Computer companies woo advanced 'techno-wizards'

THE BALTIMORE SUN

Call it the revenge of the techno-nerds. After spending the past two years in a nearly obsessive quest to make low-cost and easy-to-use personal computer systems for the mass market, several computer companies are once again trying to win the affection of advanced computer users.

The Ambra Computer Corp., a wholly owned subsidiary of the IBM PC Co., and the Dell Computer Corp. both introduced computers this month aimed at the sandals-and-socks crowd who got the industry started in the first place. The new products blend hot-rod performance with prices just high enough to widen profit margins.

Ambra, for example, is selling desktop computers based on the new Intel Corp. Pentium processor, including one model that has two Pentium chips in it. In contrast, the Compaq Computer Corp.'s nerd machines, the Prolineas, do not yet offer even one Pentium processor.

The dual-processor Ambra TP66E2/VL (techie functions, techie name) offers such techno-nerd delights as a 512-kilobyte processor cache, a dual-channel Fast SCSI-2 controller, an S3 video controller with 1 megabyte of special video memory, 12 drive bays, 8 expansion slots and 8 megabytes of main system memory (upgradable to 128). It has a base price of $4,999.

Ambra is also offering models with IBM's "Blue Lightning" 486 chips, which are similar to Intel's popular DX2 "clock doubling" chips. Triple-speed Blue Lightning 486 chips, operating at speeds of 100 megahertz, are said to be in the works.

For its part, Dell is offering the Dell Dimension XPS 466V. For the very impressive price of $2,999, the user gets a system built around a 66-megahertz Intel i486 DX2 chip.

It includes a generous 16 megabytes of system memory, 256 kilobytes of cache, 450 megabytes of hard disk space, a double speed CD-ROM drive, VL local bus video with 1 megabyte of video memory, a high-performance video card for accelerated Windows performance, six expansion slots and five drive bays, a 15-inch color monitor, a keyboard, a mouse and a year of next-day on-site service.

To make the system even faster, Dell offers as options a Viper VL video card ($199 extra and well worth it).

It's enough to make a nerd's socks roll up and down.

Dell and Ambra both have two broad goals: first, to bolster their profit margins by selling feature-loaded systems to the computer cognoscenti, and second, to win those sophisticated customers away from mail-order manufacturers.

From nerds to wizards

The term techno-nerd has acquired a vaguely pejorative flavor, summoning images of socially maladroit guys (most nerds are male) wearing pocket protectors crammed with bit tweezers, byte tongs and at least one of those fat pens that write in four different colors.

Actually, computer nerds can be fairly normal, and the computer companies, fearful of offending potential customers, shy away from the nerd term. At Dell, these computer-savvy customers are called "techno-wizards." At Ambra, it's "enhanced buyers." At Gateway 2000, a South Dakota company so nerdy that it puts its computers in boxes painted to resemble cows, the customers are "big kahunas."

Power-users, hackers, propeller-heads, whatever you call them, they are the computer buyers who demand cutting-edge performance and they know their prices. They may actually read manuals and don't need a lot of technical hand-holding. They are comfortable buying advanced PC systems directly from the manufacturer in order to save money. They are just as likely to be home hobbyists as corporate computer mavens.

But most important to the PC makers, techno-nerds are nearly ideal customers (except that they typically buy one PC at a time instead of 100).

"The techno-nerds are always ready to upgrade," said Andrew M. Seybold, an industry analyst. "They buy higher-end systems, and there's more profit in those machines. They know they need 16 megabytes of RAM and a 500-megabyte hard disk and local bus video."

"Everybody was too busy trying to get the low-price spread on the market, and what happened was the techno-nerds were buying stripped-down 486s and adding their own stuff," said Mr. Seybold, editor of a newsletter called Andrew Seybold's Outlook on Professional Computing.

These customers would buy the engine and the chassis, in effect, and then spend their money elsewhere on high-performance components.

Just adding a CD-ROM drive to a computer can almost double the profits. And profits are scarce these days. In 1992, industry research reports show, PC unit sales rose 15 percent but prices fell 30 percent on average. Not only have prices continued to fall in 1993, but unit sales have slowed, leading to dangerously thin profit margins at some companies.

"Pricing can go a little lower, but if it goes much lower everybody is going to go out of business," said JoeAnn Stahel, a senior analyst for the market research firm Infocorp in Dallas. "To survive, all of the PC companies have to look at ways to differentiate themselves."

Thus, Dell and Ambra are gunning for a neglected segment of the market. Dell used to be the darling of techno-nerds -- er, wizards -- but it lost them when it turned its focus to corporate America. Compaq had the technical reputation to appeal to nerds, but it didn't start selling directly to customers until recently, and its prices were too high. Ditto AST Research.

Gateway 2000 targeted

As a result, many techno-nerds looked to Gateway 2000, whose goofy magazine advertisements evoke memories of publicity photos from a high school theatrical. They also bought from such direct-marketing manufacturers as Northgate, Zeos and CompuAdd, but all of those companies have been on shaky financial ground.

Officials of Dell and Ambra are candid in naming their targets, and one is Gateway 2000, which rose from the cow pastures of North Sioux City, S.D., to become one of the nation's 10 largest personal computer makers. Another is Compaq, perhaps the most successful PC maker of the past two years.

Ambra, based in Raleigh, N.C., was established earlier this month by the IBM PC Co., because IBM surmised, rightly so, that no self-respecting nerd would ever buy something with an IBM nameplate on it.

To feed the nerd's desire for the latest and greatest, Ambra is planning to roll out new models every 90 days to 120 days, said David B. Middleton, Ambra's president, a frantic pace by any standard. The trick is that the machines are not made by IBM, but rather assembled by other companies.

The idea of a steady flow of new models may delight the nerds, but it frustrates average consumers.

(Peter Lewis works out of the New York Times' Austin, Texas, bureau: [512] 328-8258.)

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