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player ready...The sea of Hewlett-Packard and Compaq boxes at electronics stores is beginning to part, making way for a new generation of computer companies.
Hewlett-Packard Co. and Compaq Computer Corp., having completed their merger, are leading retailers to wonder whether they should stock up on other brands to give consumers more choice.
One chain, Best Buy Co., is experimenting with a spectrum of brands, starting with a low-cost, basic computer and ending with a top-of-the-line, luxury PC.
Other retailers are expanding their current stock of competing brands, including Sony Corp. and eMachines Inc.
“HP and Compaq have had a quite dominant share of the retail market for a long time,” said International Data Corp. analyst Roger Kay.
“There was a clear sense right after the announcement of the merger that retailers wanted to de-emphasize their shelf space and allocate more to fit others in.”
The two computer giants haven’t lost much ground yet. HP still holds about 43 percent of U.S. retail shelf space and has fought aggressively to keep it, according to ARS Inc. analyst Toni Duboise.
Compaq now holds only about 26 percent of the space on retail shelves, as it shifts to selling more custom-made computers.
HP and Compaq have acknowledged they may lose some market share in consumer PCs because of the merger.
Many retailers believe consumers are looking for more choices anyway.
“We get a better reception from customers when we have a better selection of name-brand products to choose from,” said Best Buy spokesman Jim McManus.
In January, Best Buy announced it would sell its own low-cost computers, called VPR Matrix. VPR stands for “value, performance, reliability.” The Minneapolis company also started selling computers made by Alienware Corp., a small Miami company that builds lightning-fast PCs for gaming enthusiasts.
“The main reason Best Buy came looking for us is that they were looking to fill the void of a high-end computer,” said Alienware spokesman Kevin Wasielewski. “But having one less company out there on the shelves definitely helps.”
Circuit City Stores Inc. sells eMachines, Sony desktops and Toshiba Corp.’s laptops, along with HP and Compaq PCs.
Both eMachines and Sony have elbowed their way onto store shelves in recent years–eMachines through competitive pricing, Sony by optimizing its Vaio computers for audio, video and graphic design.
EMachines now has about 16 percent of U.S. retail shelf space, and Sony has about 11 percent, according to Duboise of ARS.
“I don’t think there’s any question that Sony and eMachines are probably going to be the two that benefit most in market share,” said David Goldstein, president of research firm Channel Marketing Corp. “They have the existing relationship and have shelf space on retailers’ shelves now, so it’s easier to expand and create bigger relationships.”
That’s been the strategy all along, Sony and eMachines said.
“Regardless of what’s occurred with that particular merger, our strategies have been to develop the business,” said Sony Vaio marketing vice president Mark Hanson. “The market itself is shrinking, but our growth is huge.”
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