Best Buy Co. Inc., the Eden Prairie-based electronics retailer,
is testing a new approach to selling personal computers by
quietly introducing its own "vpr Matrix" brand desktop PCs, which
sell for $900 and up without a monitor.
The entertainment-oriented PCs were put on the shelves in all
Best Buy stores without fanfare on Jan. 13, and they won't be
sold through the company's Web site, BestBuy.com, until Sunday.
The introduction of the Best Buy PC line comes after industrywide
holiday PC sales turned out better than expected, although 2001
was not a good year for PC sales. Chip manufacturer Intel and PC
manufacturers Compaq Computer and Hewlett-Packard all said
holiday sales of PCs were above expectations.
"I think the most accurate way to describe it is that we are
testing a new business model for PC retailing," Best Buy
spokesman Jim McManus said. He said the "vpr" in the PC name
stands for "value, performance and reliability."
One element of the new business model is that Best Buy's vpr
Matrix PCs will have smaller production runs than most retail
PCs, which McManus said will enable Best Buy to respond faster
to changes in technology. Best Buy's name and logo do not appear
on the PCs, but they are manufactured exclusively for Best Buy
by U.S. and Asian firms that Best Buy declined to identify.
The vpr Matrix PCs will make it easy for consumers to use
high-speed broadband Internet access, hook a digital camera to
the PC or use the computer to play and record MP3 music files,
McManus said.
To do that, all the vpr Matrix models include 512 megabytes of
memory, a CD-RW drive that can burn music or data onto a CD, a
DVD drive capable of playing DVD movies and three high-speed
"FireWire" ports that can be used to quickly transfer digital
home movies into a PC for editing.
"We think that entertainment focus is an area that Best Buy
specializes in," McManus said. "We also believe we have
emphasized value that consumers will respond to."
The three base models of the vpr Matrix are based on Intel's
Pentium 4 microprocessor, range in price from $900 to $1,300,
and include only the computer, keyboard, mouse and speakers.
Best Buy said it will sell more expensive "PC bundles" that
include a monitor and a printer, and that it will provide
technical support to buyers of the new PCs through an 800
number.
Other sales continue
The vpr Matrix machines do not replace any of the desktop brands
Best Buy has been selling, including Compaq, Hewlett-Packard and
eMachines, McManus said.
Best Buy is not the first PC retailer to introduce its own line,
but earlier efforts were not particularly successful. Comp USA
introduced its own line of build-to-order desktop computers in
late 1997, but the PCs had little impact on the market.
Graeme Thickins, a Bloomington computer industry marketing
consultant, said Best Buy's entry into the PC business "is just
further proof of the 'commoditization' of the PC. Best Buy is
hardly becoming a product company with this move. Branding and
innovation isn't the game here -- selling massive amounts of
beige boxes is, and snatching margins from the weak" PC
competitors.
The $900 model includes a 1.6 gigahertz Pentium 4 processor, an
80 gigabyte hard drive and a 32 megabyte video card. The latter
helps a PC rapidly display graphics on a screen. A second model
costing $1,100 includes a 1.8 gigahertz Pentium 4 chip, a 100
gigabyte hard drive and a 64 megabyte video card. The high-end
$1,300 PC includes a 2 gigahertz Pentium 4 processor, a 120
gigabyte hard drive and a 64 megabyte video card.
The vpr Matrix prices put them in the middle to high end of the
retail PC market, and contrast sharply with the low-priced
eMachines PCs that Best Buy sells. Best Buy's low-end eMachines
model sells for as little as $400 after rebates, and comes with
a 17-inch monitor and a color printer. The most expensive vpr
Matrix PC rivals the cost of the most expensive PC that Best
Buy advertised in last Sunday's advertising circular, a $1,500
Hewlett-Packard PC with a 17-inch monitor and a color printer.
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Copyright 2002,
Best Buy Selling Its Own Brand of PCs
Minneapolis Star-Tribune - January 24, 2002
by Steve Alexander
Technology Reporter
Minneapolis Star-Tribune.