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• Clash Of Cultures

  Steven Levy 9/4/2001 12:00:00 AM

  Still, beyond the questionable timing-why would HP chief executive Carly Fiorina double down when the personal computer industry is shedding more red ink than a splatter film?-there's a more subtle story in this shotgun marriage of two unique corporate giants: a tale of fading cultures and difficult transformations in this most Protean of industries.

• RETAIL

  Is The Pc Boom Over?

  It was strangely quiet in the PC and laptop aisles of the Union Square CompUSA in San Francisco last week. One patron was playing solitaire on a $2,600 Sony VAIO desktop. A few others were watching "Terminator 2" on a flashy flat-panel screen. No one was shopping for a new computer. "When I got here four months ago, you didn't have five minutes to yourself," says salesperson Steen Lucas. "Now, there's nothing going on." Wall Street seems to agree. In the past few weeks, profit warnings from PC makers Apple and Dell and chipmaker Intel have sent PC stocks diving in an already gloomy market. Apple is now down 65 percent since Labor Day; Dell, 37 percent. PCs are also stagnating on store shelves: shipments in the United States were up only .03 percent in the first half of this year, and Apple recently announced a steep $300 rebate on its much-hyped Mac Cube. Is the PC market--an engine of the Internet economy and an indicator of our overall economic health--starting to sputter? The PC firms themselves don't think so. Each had an excuse, ranging from weakness in the European market to consumer jitters about the economy, for what Apple CEO Steve Jobs dismissed as a "speed bump." But some analysts paint a more disturbing picture. They say the industry has reached saturation. Most consumers and businesses already own computers and replace them only once every few years.

• Computers Get Chic

  Late next century, when scholars are scripting the definitive history of the PC, these last few years of high-octane growth may actually be depicted as the Dark Ages. Historians will marvel at how we toiled in front of monolithic, beige BUBs (big ugly boxes), suffering under the oppressive glare of cathode-ray tubes while our legs scraped against the 30-pound towers beneath our desks.

• Why They're Cloning Apple

  Hardly anyone had ever heard of Apple's partner in the venture, Power Computing Corp. Who's that? asked Richard Shaffer of Technologic Partners in New York. "We're all waiting for bigger names, bigger companies." If leading PC makers like Compaq Computer don't make Macs, the thinking goes, Apple's cloning campaign will fizzle.

• Here's A Pc For Peanuts

  Since Oct. 1 of last year 128,000 yen is what Houston-based Compaq Computer Corp., the third largest maker of personal computers in the world, has been asking for its desktop PC. By U.S. standards, it's not a bad price. By Japanese standards, however, it is an unfathomable price-a full 50 percent beneath the price tag for a similar model sold by NEC Corp., Japan's flagship computer company, which controls about half the PC market. Japanese analysts immediately scoffed-a "gimmick," one brokerage house decided-and NEC reacted like an elephant that's just had a fly land on its back-it ignored it.

• The Players

  With few products out so far, the playing field is still level-and some analysts say U.S. companies could leap Into the market with systems surpassing longstanding Japanese development plans. Not everyone accepts that scenario; skeptics cite Japan's awesome manufacturing prowess. American firms have all but left the market for many components, so "U.S. firms will be dependent to a large degree on Japanese manufacturers," says one Japanese analyst. Even If U.S. and Japanese firms collaborate, there's a danger that the Japanese could learn the technologies and break away to beat American firms In manufacturing. Jeff Zavaterro, an analyst at Jardine Fleming Securities Ltd. In Tokyo, says, 'The best the U.S. can hope for would be [selling] patent rights.'

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