From PC to pc
If he cared anything about the chief executive of IBM, which he doesn't, Phil Sego might have been embarrased for him. As it was, Sego, owner of a Cambridge-based computer import company called Unitech Inc. and an IBM competitor in a very small way, found what the CEO had to say funny. In a blast of what was either corporate pique or resignation, IBM's John Akers gave a group of securities analysts his impression of Rodney Dangerfield: IBM personal computers couldn't get no respect.
At that meeting in June, Akers said that the personal computer market was becoming "increasingly commodity-like." That was to say, the consumer was no longer buying name brands such as IBM without concern for price. No, the consumer, having come to expect PCs to have similar basic features and capabilities, was very much concerned with price. To a large segment of the market, the IBM name and reputation--the security of buying an IBM personal computer--no longer outweighed the fact that comparable computers sold at $1,000 less. If this market trend continued, Akers told the analysts, "you will probably see IBM departing from those parts." IBM wasn't going to slum it at the low end of the market; it would instead take its microchips and go home.
Akers was talking about people like Sego, who sell no-brand $800 personal computers capable of running any IBM software. "When IBM went into the PC market," Sego said, "they weren't aware that it is a commodity. IBM can't respond to all kinds of markets. With Akers' statement, IBM defined themselves as what they can't be."
For a fast-moving entrepreneur with an eye for the opening like Sego, this defined what his business could be. "I, like many others, jump in as soon as IBM writes off a market. It's Unitech's niche."
In the past two years it has become the niche of a lot of small New England companies. Simply speaking, the low end of the $14.6 billion personal computer-market (estimated 1986 U.S. sales, according to International Data Corp.) borders on hysteria. Dozens of companies, founded by rather breathless young men and women in their 20s, are jockeying for their piece of the action. Prices drop almost weekly, and supply barely keeps pace with demand. Not really manufacturers, these companies assemble their copies (called "clones") from parts supplied mostly by Korean and Taiwanese companies. Nearly all of these young companies are registering sales, at this stage, of less than $5 million. Nearly all, too, are seeing growth rates of 100% or more. Much more.
"You have these people--Steve Jobs [of Apple Computers Inc.] taught them they should be worth $100 million by the time they're 40," said Aaron Goldberg, microcomputer research specialist at International Data Corp. in Framingham, Mass. "They saw there are no barriers to selling PC clones. Even if you're small, if you sell a thousand, that's going to generate $1 million in revenue and a hefty profit."
The potential profits are fat. From $400 to $500 in parts and an …