The Gazette from Montreal, Quebec, Canada • 33

THE GAZETTE. MONTREAL, WEDNESDAY, AUGUST 23, 1994 D4 Little brands capture 35 of PC market hungry in cyberspace Students can order pizza via Internet JOHN BURGESS WASHINGTON POST ASSOCIATED PRESS the spread between them is not as big. Today they typically stress attention to customer whims. Know exactly what you want? We'll build precisely that machine for you. You can even watch.

Erol's TV and Computer, successor to the company that formerly ran a chain of video rental stores in the Washington area, was selling national brands, said Orhan Onaran, its president. But "people came in and wanted certain computers built in certain ways." So Erol's is doing that. Many stress their local roots and that the factory (though that's rather a grand word for it) is right there in the shopping centre, not half a continent away. If you've got a problem, you can bring the machine in and the very guy in blue jeans who built it might be on duty, curious as to what went wrong. Don't need glossy brochures "We've got quite a bit fewer customers than IBM or Compaq," said Aaron Reese, an account executive at Leeco.

He means that as a strength -the company has time to deal with them. Many of the build-to-order shops aim at the business customer. That way they can sell 10, 20 or 100 machines at a time. CompuTec President Ben Saleh estimates that only about 10 per cent of his business is with retail consumers. Compared to consumers, corporate buyers might feel more secure about going with small companies.

They don't care if machines don't come with glossy brochures. If they have doubts about the quality, they have the expertise to open up the box and check what's inside. And if a computer maker isn't around to honor its warranty in a year, that's too bad, but no disaster. The corporate computer manager knows that these machines are built from industry-standard parts, which can be swapped with new ones bought at a superstore in the suburbs. That's the reason, after all, that the company was able to set up in the first place.

too, for making a disk drive or even a keyboard or a monitor. When mainframes and other big systems were king, these jobs typically took place within a single company. IBM and Digital Equipment Corp. were self-contained operations, building most everything in-house to their own private specifications, then assembling them into finished product as the last step. But PCs were different.

Their basic technology became readily available early on. The industry fragmented into hundreds of suppliers here and in Asia, each making components to industry-standard specifications so that they could all be mixed and matched at will by assemblers to make a single working computer. It took IBM years to figure out how important a change this was. In the 1980s, it continued to engineer many of its own PC parts and to force suppliers to meet special standards that were meant to ensure quality but mostly slowed production and added costs. IBM priced its machines at 30 per cent, 40 per cent, even 50 per cent higher than the market, and got into real trouble.

People discovered they could get a fine computer at a lower price by turning to the little companies. So they did. In the early '90s, IBM and other big companies that had tried to ignore this woke up and started cutting costs. IBM now stresses how oh-so-industry-standard its machines are. Compaq Computer Corp.

too. So, building PCs is an easy business to enter. These days it's also an easy one to leave, in bankruptcy. The big companies have been expanding like mad of late as they approach the little companies' prices if the difference is not that much, many buyers would rather go with a brand they know. Research company International Data Corp.

predicts that the industry's top 10 companies will account for 70 per cent of the market this year, up from 50 per cent in 992. The little companies that remain still generally offer better prices than the big ones, though WASHINGTON Compaq, Apple, Dell and IBM but what about Erol's? Or CompuTec International, or Leeco? The little brands. They rarely make the news. Some people are scared to buy them. But market research firm Dataquest Inc.

estimates that last year they accounted for about 35 per cent of a $74 billion world market for personal computers. There are great flocks of these companies -just check the ads in financial pages and the backs of computer magazines because it's an easy business to enter. You and I could set up shop tomorrow. We wouldn't need much money or, for that matter, much expertise. I once visited International Business Machine main PC factory in Research Triangle Park, N.C.

Not much rocket science, even there. A high-end PS2 took just a few minutes to build, all by hand. This was strictly a cottage industry. A worker would grab a case, fit in a basic circuit board, some memory chips, a couple of disk drives, a power supply, a few other components and connect them all together with cables. When the top was popped on, the world had another computer.

Same ingredients, like Coke and Pepsi I got a real feel for what the market analysts mean when they say computers had become "commodities." Just as soybean meal is soybean meal no matter who produces it, most any company's computers are pretty much the same. Some techies will quibble with that. And to a degree, they're right. Some components are better than others. But the fact is that it's getting more and more like Coke and Pepsi.

They all essentially have access to the same ingredients. Building the components themselves is where the real challenge occurs. Designing and producing a new microprocessor requires huge supplies of highly trained people, money and time. So, Tim Bajarin, president of Creative Strategies, a Silicon Valley consulting firm, said Pizza Hut's text-based interface is likely to prove uninspiring to cybercustomers. "It's already easy to order a pizza over the phone," Bajarin said.

"To make an impact (on the data highway) they need to make it more visual. They need a better graphic He pointed to the system being developed in Virginia by Domino's and EON Corp. Under that program, interactive television viewers start with a circle representing a plain pizza and use a mouse to click with a cursor and "drag" pepperoni, anchovies or other toppings on to it. A computer at Domino's spits out the data as a standard pizza order. Stanford's Rosenberg said using the information highway to order pizza is a classic example of using tomorrow's technology to solve yesterday's problems.

When personal computers first began showing up in homes in the early 1980s, one highly touted use for them was storing recipes. Users soon discovered that old-fashioned cookbooks and index cards worked just as well, if not better. Said Rosenberg: "When new technology arrives, people try to fit it into the existing system and use it to do things the existing technology can already do. "It takes a while to find things you can do with it that you can't do with the old technology." ADDITIONAL REPORTING: NEW YORK TIMES "SANTA CRUZ, Calif. For those hungry hackers who can tear themselves away from their keyboards, Pizza Hut has the solution: Dial up your pizza, with choice of trimmings, on the Internet.

JThe chain is test marketing the new system in Santa Cruz, which has a large concentration of pizza eaters and Internet users at the University of California, Santa Cruz. During the 90-day trial that began this week, users can order a pizza simply by logging on to PizzaNet in the World Wide Web and typing http:www.pizzahut.com.w The order will be transmitted to a computer in the company's Wichita, headquarters, where it will be confirmed and routed back to the Santa Cruz outlet. lot of our customers are on the Inf erneC Pizza Hut vice-president Rpb Doughty said. "If they get hungry in the middle of the night, we want to be there for them." Jf the Santa Cruz trial is successful Pizza Hut plans to expand it to other communities where the Internet, the web of computer networks that links users worldwide, is popular. Some people question the whole concept.

sophisticated technology being put to trivial use," said Nathan Rosenberg, an economist who directs the technology and economics program at Stanford University's Center for. Economic Policy Research. Hayes tries to unload Kitchener-Waterloo research and development facility Tn.otnUi-MiniffH Hav hac not released sales fieures anH has been recoenized internationally as a leader in TOM NUNM KITCHENER-WATERLOO RECORD since 1 983-84, when it was named one of the top 10 fastest-growing private firms in the United States by Inc. Magazine two years in a row. But the Hayes name is as well known in the modem business as IBM is in personal computing.

The company's research and development is conducted in San Francisco and Waterloo. The Waterloo office has been the key mover behind with Lanstep. About 1,000 people are employed by Hayes, most of them in the U.S. The company has regional headquarters in London, and Hong Kong and a technical service station in Beijing. "What we came up with is that we need to focus more on our core business, which is PCmodems, and divest ourselves of Lanstep, which is a network operating system," she said.

Peggy Ballard, Hayes vice-president (marketing), said the Waterloo product is strong and Hayes is already talking with potential buyers. Several local industry sources said, however, that Lanstep sales might not be meeting Hayes expectations, and the product will face stiff competition from Microsoft new operating system, Chicago, which offers similar features. computer science research. "It's our hope that whoever buys the product will maintain that research facility and the people working there because they know so much about the product, Angela Hooper, a spokesman at Hayes' head office Norcross, said this week. If the business is not sold by year-end, the research and development jobs here will be cut, company officials said.

Only four employees in sales and support would remain in Waterloo. The decision to sell the Lanstep v.2, a computer networking product, came after an internal product re- KITCHENER-WATERLOO, Ont. U.S.-based Hayes Microcomputer Products plans to sell the computer product line it developed in Waterloo by year-end, putting at risk one of this area's leading computer research facilities. About 24 employees work at Hayes' facility in Waterloo, formerly known as Waterloo Microsystems until Hayes bought the company in 1990. Founded in 1982, Waterloo Microsystems was spun-off from research at the University of Waterloo, 1 I I Take a "byte" out of knowledge A.

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