New Vendor Enters Desktop PC MarketNew Vendor Enters Desktop PC Market

The PC market has seen more vendors drop out in recent years than new competitors enter the fray. But U.K.-based Pelham Sloane Ltd. on Tuesday said it will begin shipping in September its first desktop PC, one that packs its processor, memory, and other components into a sleek flat-panel display less than 3 inches thick. The vendor doesn't seem worried that the desktop PC is struggling to avoid the label "commodity" and that laptop computers are gaining market share over their desktop siblings.

The Pelham Sloane PS1500 will initially ship with a 15-inch monitor and offer a choice of a 2.4-GHz Intel Pentium 4, a 1.8-GHz Intel Celeron, or a VIA 933 C3 processor. The PS1500 also will feature up to 1 Gbyte of RAM and 120 Gbytes of hard-disk storage. Larger models, including the 17-inch PS1700 and the 20-inch PS2000, will be available by the end of the year. The PS1500 will ship with either Microsoft Windows XP Professional or XP Home operating systems. Some models are available with touch-screen capability that lets the user work directly from the screen, in some instances forgoing the mouse and keyboard.

Pelham Sloane chairman John Jensen sees the market for all-in-one flat-panel PCs growing as companies look to clear space on their employees' desks without sacrificing performance or screen size. "People are willing to spend more for a flat screen or a laptop if it improves their work environment," he says.

Jensen may have a point. A survey released earlier this month by the NPD Group indicates that sales in May of liquid-crystal displays surpassed those of traditional monitors based on cathode-ray tubes. LCD sales were 52% of the monitor market, up from 22% in May 2002, according to the market research firm.

Pelham Sloane may be hitting the market at the right time. "We're extremely confident that, going into 2004, tech spending will be up," says Bart Stanco, Gartner's senior VP of corporate development and strategic accounts. "Pelham Sloane has the right combination of form factor and capabilities to take advantage of the demand companies have to cut the size of their desktops."

Pelham Sloane will face a formidable challenge as it tries to take market share away from more established vendors such as Dell Computer and Hewlett-Packard, even with the all-in-one form factor, says Roger Kay, director of client computing at research firm IDC. "This is a time when the IT industry is consolidating, when vendors already in the industry are having trouble making money," he says. "It may take years for Pelham Sloane to establish a brand identity."

Pelham Sloane will also have to contend with an all-in-one, flat-panel PC market that has yet to prove itself. Although Apple Computer, Gateway, and NEC have entrants in the market, IBM stopped selling its NetVista X41 all-in-one flat panel PC in March 2002 after two years on the market. IBM says its market research shows that business customers prefer a more modular design. "Gateway's Profile PC continues to sell in low volumes, and Apple's iMac sells to a market that's not too sensitive to price, valuing form over cost," Kay says.

Pelham Sloane will sell its PCs directly through its Web site and through channel partners. Pricing for the PS1500 ranges from $1,369 to $1,649.