IBM's Canadian connections deliver $1,249 PC

By Richard Morochove

First published July 24, 1997

Earlier this week, IBM Canada launched a dozen new home PCs, priced as low as $1,249. If even that's too rich for your bank account, you can now lease an IBM computer with no money down.

With prices so low, you might expect IBM to assemble the PCs in some low wage country in the Far East. But IBM's secret lies behind the Maple Leaf. All the computers are assembled in Canada, some are based on a processor manufactured in Quebec and some of the bundled software is Canadian.

IBM Ambra Ispirati 33EX leases for $99 per month, including 100 hours/month Internet access.

The lowest-priced computer is the Ambra Ispirati 10E, with 16 megabytes of RAM, a 1.6 gigabyte hard drive, 16x CD, 33.6/14.4 Kbps data/fax modem with voice and speakerphone capabilities. It's based on a 150 MHz. Cyrix MediaGX processor, manufactured by IBM Canada's Bromont, Quebec plant.

This model doesn't include a computer monitor, however you can plug in most TVs to the computer's RCA and S-video output jacks. An optional 14-inch monitor boosts the list price to $1,499.

Unlike some other low-priced computers, the Ispirati 10E isn't a closed box. There's one available expansion board slot. It comes with a good range of software, including MS Windows 95, Lotus SmartSuite '97, IBM AntiVirus software, communications centre software, 1997 Canadian Encyclopedia Plus and the World Book 1997 Multimedia Encyclopedia.

Without monitor, I expect the Ispirati 10E will be discounted in back-to-school sales down to the $1,100 dollar level, providing excellent value for a first-time computer buyer.

Although the price of the Ispirati 10E undercuts the Compaq Presario 2200 (based on the 180 MHz. MediaGX) announced several weeks ago, IBM Canada's Don Myles prefers not to call this a price war. According to Myles, vice-president and general manager, personal systems and channel management, these new models have cost reductions in the design.

Myles says the new PCs include fewer bundled programs, which reduces the need for staff to answer telephone support calls. In addition, the MediaGX processor integrates formerly independent chips, to reduce manufacturing costs.

There's yet another factor at work here, the changing business model of the traditional computer makers, such as IBM, Compaq and Apple. In the past, they have manufactured computers according to their best sales forecasts, then shipped them to distributors, who then sell the units to computer retailers, who finally sell the PCs to you.

This differs from the direct sales model of companies like Dell, which assembles computers only after it receives an order from the customer. Dell then ships the computer directly to the ultimate purchaser, bypassing the middlemen. This direct sales business model requires less inventory, which lowers costs in an environment with falling prices like the PC business.

IBM has lowered costs by reducing inventory in the pipeline with a virtual inventory program. Retailers order as usual from distributors, but the distributors needn't carry any stock. The distributors use the Internet to access IBM Canada's records. The distributor can then request IBM to ship the computers directly to the dealer.

Assembling the computers in Canada allows IBM to respond more quickly to market conditions.

If you can't afford to buy a computer now, you can lease one from IBM. The Ambra Ispirati 33EX is similar to the Ispirati 10E, but features double the memory and disk capacity and a 15-inch monitor.

If you're a mediocre typist, you'll appreciate IBM's Simply Speaking Gold software included with this model. This voice navigation and dictation software lets you surf the Net by giving voice commands to a special voice-enabled release of Netscape Navigator. In addition, you can dictate directly into a word processor and see your words turned into text.

The 33EX leasing deal, called the Ambra Ispirati Internet Solution, includes up to 100 hours per month of Internet usage from the IBM Global Network. The total bundle of hardware, software and Internet access leases for $99 per month for 36 months, with no money down. This offer will be available in August from IBM's Home Computing stores and its Web site.

IBM Aptiva E Series computers feature more expansion capabilities than the Ambra Ispiratis.

The six Aptiva E Series models are towers that offer more expansion capabilities than the Ambra Ispiratis, with four available drive bays and six option board slots.

Prices range from $2,149 to $3,499 including monitor. All models include the ATI Rage II video card for arcade-like 3D graphics, 24x MAX CD, 56Kbps modem and 10 free hours of Internet access. The Aptiva E Series will be available in Sept.

The base model Aptiva E05 is based on the 166 MHz. Cyrix M2 chip, which is compatible with Intel's MMX multimedia extensions. It includes 24 MB. RAM, 2.5 gigabyte hard drive and 15-inch monitor.

The high-end Aptiva E45 is based on a 233 MHz. Intel Pentium MMX with 48 MB. RAM, 4.3 gigabyte hard drive and a 17-inch monitor.

IBM's more advanced Aptiva C and S Series home computers will be upgraded this fall. CW