Smith Corona pitches PC wares to fed market

Smith Corona Corp., a company that has supplied everything from armaments to fax machines to the government in its 112-year history, has retooled once again and is entering the competitive PC manufacturing business, hoping its brand name and experience will combine in a successful venture of selling PCs to federal customers.

With their Pentium II processors and CD-ROM drives, the PCs are a quantum leap from a typewriter, the machine that became synonymous with the Smith Corona name long before the digital age.

The PCs also have little in common with the Smith Corona personal word processors, or PWPs, which were portable devices that government customers bought by the thousands before the PC revolution, according to the company, which otherwise missed the PC boom.

In announcing the launch of their products last week during the E-Gov 98 exhibition in Washington, D.C., Smith Corona officials said they decided to enter the government market because it allows the company to focus on a small segment without the worry of getting lost among the shelves of a large computer store such as CompUSA.

"It's easier to approach this market," said Brad Mack, a Smith Corona consultant based in Centreville, Va., who also has held jobs at BTG Inc. and Government Technology Services Inc. "The broad PC market has too many challenges."

The demise of Zenith Data Systems Inc., Apple Computer Inc.'s diminishing returns and the consolidation of large PC manufacturers, such as the union of Compaq Computer Corp. and Digital Equipment Corp., have created room for Smith Corona's products, according to the company, which emerged from Chapter 11 bankruptcy protection in February last year.

The company also believes it can leverage the strong brand- name recognition developed in the typewriter market.

"We have found that government users are very emotional about Smith Corona," Mack said. "Everyone in government has typed on a Smith Corona. It's nice to start a PC brand with the kind of name recognition Smith Corona has."

Smith Corona has introduced three models in its Professional Workstation line and a laptop model (see chart, Page 44).

Mack said Smith Corona positioned the products to compete with similar models offered by Dell Computer Corp. and Gateway 2000 Inc. The Gateway NS7000266, which offers features similar to those of the SCDP-8001, has a General Services Administration price of $2,087.

Smith Corona has distributed nearly 40 PCs to military bases for evaluation, Mack said. Other incentives include a three-year warranty on parts and labor— the first year of which is on-site— and a money-back guarantee for returns within 60 days. Smith Corona also throws in a free day of training on any Microsoft Corp. software at CompUSA.

But analysts say Smith Corona is getting into PC manufacturing late, a little like John DeLorean's entry into the car market in 1981 decades after the large automakers became established. "Nobody is making money selling desktop computers," said Roger Kay, senior analyst at International Data Corp., Framingham, Mass. "Maybe they are hoping the government will be naive and pay out like it did for the $800 toilet seat, but I think those days are over."

While it is true that margins are better at the higher end, Smith Corona will have to compete against heavy hitters such as Hewlett-Packard Co. and Compaq, Kay said. Peter ffoulkes, a principal analyst at Dataquest, San Jose, Calif., said the configurations of the Smith Corona PCs are typical of desktop devices as opposed to workstations, which tend to be more suited for mechanical design and other applications that require 3-D graphics and that often run on a Unix or Solaris operating system.

But the label "workstation" might not matter because the user defines the tasks required of the PC anyway, ffoulkes said.

"I think if they are saying they are doing this specifically for the federal government, they are identifying a niche, and presumably they have done some suitable research to work out exactly what is going to be desirable to the federal government," ffoulkes said.

There is no reason to believe Smith Corona cannot do that, and because the company is pursuing business in a defined segment— as opposed to the general market where PC makers are "getting squeezed"— it might make good business sense, he said.

Smith Corona also has borrowed Dell and Gateway's build-to-order model, promising to ship orders of up to 1,000 units within seven days, Mack said.

The PCs, as well as the SCNP-5000 laptop, will be offered on Smith Corona's GSA schedule, Vanstar Corp.'s GSA schedule and by the 8(a) contractor Native Technologies Inc.

As for Smith Corona's typewriter business, it is still in operation. It posted worldwide revenue of $125 million last year.