MicronPC refocuses on small business, niches

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By Frank Thorsberg

(IDG) -- During one of the most aggressive price-cutting periods in PC history, a slimmer MicronPC is pulling back a bit from consumer sales. But you may still find its bargains in small-business, education, and government sales.

MicronPC, purchased by turnaround artist Gores Technology Group in May, is number 11 in the desktop PC market with less than 1 percent of overall sales, according to figures compiled by IDC. So can you still buy a MicronPC product?

MicronPC continues to offer consumer models via its Web site and through retailers, including a "custom-order-by-kiosk" deal with Best Buy. While the new managers want to partner with more resellers, they are focusing their markets.

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Quality and Customer Service Promises

"We have refocused the company on very targeted and strategic areas -- areas where we have proven success," says Mike Adkins, a former division head who was promoted to president and chief executive officer of MicronPC.

He says the "sweet spot" in the market for MicronPC is companies with hundreds, not thousands, of workers.

Current customers and prospective buyers will see the same quality as before, promises Adkins, even though he cut 250 jobs the last week of May. MicronPC's workforce has been chopped from 2000 to 1100 since March.

"This transaction [sale to Gores] should be transparent to anybody out there," the CEO says. "Our customer service and warranties remain intact, and they [customers] should expect what they've gotten from us in the past."

Niche Strategy

Adkins says MicronPC will attack markets where his smaller, more focused organization has a fighting chance against its much bigger rivals.

"In order to play in the Top Five, we'd have to be everything to everybody, cover all segments," Adkins says. "We are taking a narrow approach, focusing on past and proven success points."

Market leader Dell and Top Five competitor Gateway have been discounting right and left, while MicronPC is cutting jobs and prices. Some brands might not survive another year of cuts, according to some analysts.

"It's going to get ugly for the rest of this year," says analyst Rob Enderle from Giga Information Group. "The market is not expanding, and everybody is going after everybody else's market share."

Anne Bui, a research analyst with IDC, likes MicronPC's redirected attack, but she's only cautiously optimistic it can work.

"There are lots of challenges ahead," Bui says. "Big vendors like Dell are also focusing on those segments. Dell has made a lot of inroads into education and the small- and medium-size business markets."

MicronPC must move quickly to survive, analysts say.

"Micron has not been able to fight back for a while, and now they're in an incredibly fast race, and they're late," says Enderle. He points to new designs anticipated from MicronPC for the Christmas season as one positive nod to the consumer market.

Can Gores Do It Again?

Gores drove Mattel's The Learning Company from money-loser to profit-maker in just 90 days last year. Can it work the same magic in the PC world?

"It's a really tough fight," Enderle says.

Gores has made 35 high-tech acquisitions since its launch in 1992, including the much-ballyhooed purchase of The Learning Company. The educational software firm was losing $1.5 million a day as a toy-maker subsidiary, but Gores's crew quickly reversed course and moved into the black within two and a half months of the changeover.

"The goal is to achieve lasting viability and profitability," says James Bailey, a Gores group president. "MicronPC will take advantage of being a smaller-market-segment focused company."

Its MicronPC acquisition was announced before Gores snatched up another technology company, electronic-payment provider VeriFone, from Hewlett-Packard in May. HP paid $1.2 billion for the electronic transactions specialist in 1997, but that corporate association never really clicked.