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Market Focus: Computers and business equipment

February 1, 2000

13 Min Read
Market Focus: Computers and business equipment

The computerand business equipment industries are on a strong pace due tocontinued demand for their products, which has been fueled bylower prices. But all is not rosy, particularly in the computerindustry. Prices have been in a free fall for nearly two years-downmore than 17 percent in 1998, with analysts expecting another15 percent drop in 1999-putting the squeeze on computer makers'profits and putting a big dent in growth (expected to be lessthan 5 percent).
Sales are dropping as well, which is evidence of saturation inthe U.S. PC market according to Martin Reynolds, a research fellowwith Dataquest in San Jose, CA. "There's more than 50 percentcomputer penetration in the home PC market," he says, "withno new [areas] to go to."
Reynolds says computer makers are still shipping some 30 millionunits a year in the U.S. market. Japan, Europe, and Asia stillrepresent the best opportunity for increases in sales, since amuch smaller percentage of their populations has PCs. Incrementalsales there may gradually become a smaller percentage annuallyas the growth rate slows. However, these countries will add "gargantuannumbers" of PCs, he says, about 12 million this year andan estimated 10 million next year.

PC shipments,U.S. (million)







New Directions

With computer prices as low as $499 and predictions of $299PCs, some companies are giving away hardware to consumers in exchangefor contracts to buy monthly Internet service, and others arelooking in new directions for growth and profits. The result isa move into e-commerce and other technology, as these three examplesshow:

  • Earlier this year, Compaq Computer launched a new company around its AltaVista search engine. It's also hopeful that sales from an online store, Shopping.com, which Compaq purchased in January 1999, will give the company a boost.

  • Dell Computer's Gigabuys.com offers consumers some 30,000 products, and the company has plans for further expansion of that site.

  • Hewlett-Packard plans not to sell servers in the traditional method, but H-P and its partners will play host to others' websites on H-P servers, and collect monthly service fees, lessening their dependence on the fickle movements of hardware sales.

Disposable PCs?

To sell more PCs, computer makers are targeting ways to getconsumers to replace their PCs more often by eliminating oldertechnology and designing computers with limited expansion capabilities."If it were a very simple device, you wouldn't have to changeit out," explains Roger Kay, manager of Desktop Practicesat International Data Corp. (IDC) in Framingham, MA. "Itgoes out of date, so you just toss it and buy another. There'sdefinitely a clear trend toward junking the old and buying new."
However, another argument suggests the opposite. Documented researchby IDC asking consumers how long they intend to keep their PCshows that most people aren't planning to get rid of their PCsas quickly as some predict.
All could be moot, however, as new technology promises to supplantthe PC in the home PC market. Both Compaq and H-P, which havelost business to Dell, hope to boost sales by making their businessPCs less expensive to make and more
user-friendly to install and operate.
Computer makers are also turning to new types of products outsidethe PC business, such as mobile phones and other types of informationdevices. As computing becomes more ubiquitous and portable, consumerswill see an array of new devices springing up to compete with3Com Corp.'s PalmPilot.

Forecastshipments of mobile computers, U.S. (million)











Business Equipment

Competition in the business equipment market is also pushingconsumer prices down. Xerox Corp. is making moves to reduce itscosts to manufacture and cut its supplier base in the face ofan onslaught of rivals such as Canon Inc. in the copier business,and in the consolidation of printers and copiers into single unitsused for the same task. Lexmark International and Hewlett-Packardboth plan to introduce new products that will go head-to-headwith Xerox's lower-priced machines.
Research provided by IDC indicates that 16 million printers worldwide,representing $6.9 billion in sales, were shipped during the thirdquarter of 1999, up 12 percent from the second quarter. The growinglow-cost PC market presents both opportunities and options forsub-$100 inkjet printers and flatbed scanners.
Inkjet printer sales are expected to continue to soar, notes anIDC market report. The market had its best third quarter performanceever in U.S. shipments of color inkjet printers, shipping in excessof 4.8 million units-34 percent growth over the same quarter theprevious year. IDC also predicts double-digit growth worldwidefor the scanner market.

Total personaldigital assistant (PDA) market: Unit shipment and revenue forecasts, U.S.


 Units (million)

 Revenue (million $)

 Revenue growth rate (percent)





































For Molders and Moldmakers

With revenue essentially flat for PC makers, molders servingthis industry can't expect much better. Computer makers that couldonce be counted on to invest heavily in molds to make parts forthe long haul are now becoming as cost-conscious as the automotiveindustry. The business equipment market isn't far behind and iswatching its costs as competition drives down the prices of printersand copiers.
Under the new model of short-lived computers-an estimated two-yearlife for many consumers-we can expect this market to move to lessexpensive tooling. Many are already having tooling built in Chinaand Singapore to offset their costs. Don't expect to quote muchhigh-priced, long-lead-time tooling for anyone in the computeror business equipment industries.
Dataquest's Reynolds says molders need to explore new design andmaterial alternatives with their OEM computer customers. "Traditionallycomputers have been a big metal box with a plastic front,"he says. "Shape, texturing, and color have typically notdriven the market, but in Japan the market has shifted towardmore color and creative designs. The hot color now is metallicsilver."
Although Reynolds says that U.S. manufacturers are more inclinedto "stick with the beige box," the U.S. market shouldsee some leakage of new designs and colors, such as those Apple'siMac offers.
Obviously, as new data products get smaller and thinner, therewill be much less plastic required per unit; however, Reynoldsbelieves plastics use will be kept up by the increase in demandfor these newer devices.
Reynolds also suggests that molders need to understand how tocombine their technology with metal injection molding to helpproduce the computers of the future. "It [metal molding]offers design flexibility that you can't achieve with [plastics]injection molding," he says. "The same argument is truefor handhelds."

New Business Model

Given the new business models of mass customization for bothDell on the computer end and Lexmark on the printer end, molderscan expect to see other companies follow suit. That means a varietyof tooling configurations, fast changeovers, and little finishedgoods inventory. Plant scheduling will be critical if you're amolder for these industries. And you can expect lean margins,which means productivity and efficiency is everything.
Some opportunities will exist in new low-end entrants into thecomputer market, but expect most of those units to come from placeslike China. However, one new startup, Gobi Computer, is purchasingPCs from contract manufacturer Solectron Corp. Other opportunitiesexist in new information equipment such as handheld data devices.
Compaq Computer, in an effort to gain on Dell's lead in computercustomization, announced last month the purchase of Inacom Corp.'scustom assembly operations. Compaq said the purchase would giveit the means to provide U.S. customers with tailor-made PCs andthe ability to track their purchases over time.
With assembly and distribution plants in Indianapolis, IN, Omaha,NE, Swedesboro, NJ, and Ontario, CA, there may be more opportunitiesfor molders to establish molding plants nearby to service thesefacilities, notes Dataquest's Reynolds.
The keys to manufacturing for this market will be fast time-to-market,thin-wall molding expertise, shielding capabilities, and assemblyoperations. Molders will also need to provide a flexible manufacturingenvironment with fast response times to accommodate the increasingtrend toward mass customization.

PC/ABSdrives down
costs in server panel

Sequential injection moldingand gas assist molding were combined in a low pressure processto help make these Hewlett-Packard server cabinet panels moredurable, lighter in weight, and stylish when compared with theirsheet metal predecessors.
The 35-by-16-inch panels, winners in the computer and businessequipment category at the Structural Plastics '99 conference,are molded of Cycoloy PC/ABS from GE Plastics on a 650-ton press.The panels snapfit onto the H-P Rack System/E, designed to housecomputer servers, peripherals, and instruments. H-P set out toredesign the rack system to eliminate the need for one-piece metalpanels that are heavy, hard to handle, and vulnerable to denting.The company also wanted to incorporate design features to helpits cabinet stand out.
"Our goal was to design a smaller modular sheet metal panelto reduce the overall field replacement costs significantly, butwe found that a single, smaller sheet metal panel had nearly thesame manufacturing cost as the original one-piece large side panel,"says Horst Zittlau, H-P design engineer. "Plastic panelsturned out to be less expensive, more durable, and they can beshipped individually for much less money."
H-P eventually teamed up with GE Plastics to develop a manufacturingprocess that would address some challenges that the new conceptcreated. "Valve gate control allows for the manipulationof the melt flow fronts to achieve a surface without visible knitlines," says Peter Zuber, gas assist/low pressure program leader at the GE Polymer Processing Development Center in Pittsfield, MA. "Gas-assist molding helps ensure that textured surfaces, as well as internal features, are true and crisp because of the more uniform packingpressures that gas supplies."
The resulting system uses a two-drop hot manifold system withhydraulic valve gates as the primary resin gating method. Thisallows a relatively large part to be molded on a 650-ton press,rather than a 1200 or 1500 tonner as would be required for suchpanels with a nominal wall thickness of .14 inch. The sequentiallytriggered valve gates also help H-P control flow fronts and enablethe movement or elimination of weldlines.

For more information:
GE Plastics, Pittsfield, MA
Phone: (800) 845-0600
Fax: (800) 433-2925
Web: www.ge.com/plastics

Handheldcomputer built
with specialty compounds

TheItronix T5200 is a portable, wireless computer that was launchedearly in 1999 and used primarily by telephone company, utility,and field service technicians to perform a variety of maintenanceduties. The handheld device uses a Windows CE operating system,weighs 3 lb, and features packet data communications capabilities.
Manufacturer Itronix historically sourced resin for its productsfrom large suppliers and selected from their standard offerings.But Bill Erler, principal mechanical engineer at Itronix, saysthe complexity of the T5200 demanded a variety of different materials."It took a project of this magnitude to open our eyes tothe benefits of a specialty compounder," he says.
Those compounds are provided for the computer by RTP Co. The mostprevalent material is a flame-
retardant RTP 300 Series polycarbonate that provides impact resistancefor the housing, battery pack, handle, I/O bezel, and other latches,doors, and bezels. A lithium battery power source, as well asUL intrinsically safe product ratings, dictate a UL 94 V-0 ratingfor the compounds.
For the hand strap and
D-rings, the company provides an impact-modified 200 Series nylon6/6. A precolored 800 Series acetal is specified for the touch-screenpen. That material's natural lubricity and smooth surface preventsabrasion and wear. Finally, a 2800 Series precolored Santopreneelastomer is molded over the handle to provide a soft grip. Allcomponents are molded in Taiwan.

For more information:
Winona, MN
Phone: (507) 454-6900
Fax: (507) 454-8130
E-mail: [email protected]

ABS, structuralweb light office spaces

Many cubicles and offices are uninspiring; theyoften lack the proper light and atmosphere required to stimulateemployees to be more productive. Recognizing this, furniture designerHerman Miller designed this all-plastic workstation to radicallychange the workplace environment.
Just half the weight of metal workstations, the Herman Millerunits feature a U-shaped 4-ft-wide desk, pullout shelves, adjustabletable legs, a swinging side table, and a computer keyboard tray.Some elements of the workstation are translucent and change colorin sunlight from deep blue to luminescent orange. This featureis not just stylistic, but also helps to provide better surfaceillumination, keeping office workers more alert, say Herman Millerdesigners. "We wanted to create a structurally strong, lightweight,and durable system that creates a feeling of openness," saysDon Karaus, design and development project engineer at the company."In the past we couldn't do this with injection molded plastic.The tooling costs alone would have been astronomical."
The designer found the solution in structural web technology fromUniloy Milacron. It's a low pressure, gas-assisted molding processthat uses multiple nozzles and sequential injection. This combinationreduces clamping force requirements and allows for the use ofless expensive aluminum molds.
The workstation is molded from an ABS blend material, suppliedby Diamond Polymers and custom-formulated for the structural webprocess. The components are molded by Horizon Plastics Co. Ltd.in Cobourg, ON, which uses a 750-ton structural web Uniloy press.The single-cavity mold used to produce the desk surfaces was madeby MSI Mold Builders in Cedar Rapids, IA.
Structural integrity and material savings are achieved by injectinggas into the ribs of the honeycomb web reinforcement on the undersideof the workstation's components. The result is a topside surfacethat is smooth, free of sink marks, and suitable for writing.

For more information:
Diamond Polymers Inc.
Akron, OH
Phone: (330) 773-2700

Uniloy Milacron
Manchester, MI
Fax: (734) 428-1165
Phone: (734) 428-8371
Web: www.uniloy.com

Cleanercompounds benefit
data storage equipment

Microprocessortrays and disk carriers, other hardware handling systems, andinternal components of disk and tape drives-such as load ramps,latch levers, crash stops, and actuators-are notoriously sensitiveto plastics material contamination. Such parts are the beneficiariesof a specialty compound designed to meet the data storage industry'sgrowing need for cleaner resins.
As disk and tape drives go to faster speeds and lower flying headheights, the effects of ionic contamination in resins are morepronounced. The manufacturer of the pictured components, moldedby Entegris Inc. (Chaska, MN), chose resins that use LNP EngineeringPlastics' Clean Compound Systems (CCS), specifically a staticallydissipated polycarbonate composite. The CCS materials have a lowion content and provide minimal contamination for sensitive
data applications.
"When disk drive components and handling devices are keptas clean as possible there is less opportunity for product damage,"says Bill Feldman, business machine industry marketing managerat LNP. "For example, if you have a lever within a disk drivethat's made out of higher ionic content material, the chemicalembedded in that material can outgas and cause corrosion on thedisk itself or on other components of the drive. This can limitthe drive's life expectancy."

For more information:
LNP Engineering Plastics
Exton, PA
Phone: (610) 363-4500
Fax: (610) 363-4749
Web: www.lnp.com

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