PC Expo Features Less Excitement, Smaller Crowd

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By Daniel Sorid

NEW YORK (Reuters) – PC Expo, the technology extravaganza held annually in New York City, felt distinctly different this year — you could actually walk through the crowd with a hot coffee in your hand.

Attendance at the trade fair was expected to show a decline for the first time in its 19-year history, show director Christina Condos said. About 50,000 people were expected to turn up, down from 55,000 last year.

Giant banners nevertheless trumpeted a swarm of gadget makers, software and service providers, and builders of the computer servers that power the Internet and big business. Then, almost as an afterthought, there were the makers of the boxes called personal computers. Dell Computer Corp. (NasdaqNM:DELL – news) — the world’s largest PC maker — was not even in attendance.

“Desktops and laptops have stagnated,” said Gary Stimac, chief executive officer of business computer maker RLX Technologies, and a former executive of No. 2 PC maker Compaq Computer Corp. (NYSE:CPQ – news).

Desktop PCs were a rare sight at the show. Even Intel, whose chips power the vast majority of personal computers, drew a noticeably scant audience to its grand exhibit.

For the second year in a row, it was handheld devices and that sparkled in the forefront.

“If there’s been innovation it’s been on the Palms and Handsprings,” said Stimac.

Both companies, Palm Inc. (NasdaqNM:PALM – news) and Handspring Inc. (NasdaqNM:HAND – news), were on hand with massive displays of their latest handheld computers. Surrounding the handhelds were the add-ons that promise to transform what were once called personal organizers into powerful tools for business and entertainment.

FOCUS GOING TO HANDHELD MARKET

That booming optimism has hit something of a dead spot. Palm, which kicked off the show with its keynote address, posted fourth-quarter sales on Tuesday that were less than half what they were a year earlier. Handspring also slashed its fiscal fourth-quarter revenue expectations earlier this month, and has dropped prices to combat slack demand.

Even Compaq, which just earlier this year lost its top slot among PC makers to Dell Computer Corp. (DELL.O), is looking beyond the PC to devices and services to big business.

“Clearly I think the focus in the market is shifting,” said Compaq Executive Vice President Michael Winkler. “It says something that Palm here is the keynote speaker — it is increasingly going to the handheld market.”

Compaq has been having some success selling its own handheld device, and last week market researchers said that Compaq unseated Palm as the No. 1 provider of handhelds, in terms of revenues.

Compaq, which sells its iPaq handheld based on Microsoft Corp.’s (NasdaqNM:MSFT – news) Windows CE operating system, has said that its focus was on such devices, and on the powerful computers that are the support system for Web traffic.

In the keynote, Palm Chief Executive Carl Yankowski said handheld devices were poised to become a standard tool in corporations, in some cases replacing desktop computers as the office’s key piece of technology.

“Our business world is morphing from its a tethered PC-centric browser-based environment, into one that’s people-focused, easy-to-use, and mobile-device-centric,” he told an audience at the TechXNY conference here.

With their ability to share information between field- and office-based staff, handhelds help to increase productivity, Yankowski said, even as they free users from the burden of having to stay near an office PC or lugging around a laptop.

ROLE OF PC CHANGING

People use handhelds primarily for information and communications access, input, and management,” he said. “More and more, people will use PCs primarily for content creation.”

Palm is the major force behind handheld devices, with some 13 million units sold. It also dominates the market for software that drives handhelds made by itself and others, such as Handspring and Sony Corp (news – web sites). (NYSE:SNE – news).

Despite Yankowski’s optimistic long-term view, Santa Clara, California-based Palm has recently endured several months of troubling news as overall demand for handhelds has fallen sharply, due to the soft economy, and its stock has slumped.

Other promising devices, such as Web-surfing tablets and kitchen-top computers that were in style at last year’s PC Expo, have languished.

National Semiconductor Corp. (NYSE:NSM – news), whose Geode processor powers tablet computers, told attendees that the industry has had to put a fresh spin on previous hopes that these devices could eliminate the personal computer.

“In the beginning, information appliances were positioned as an alternative to a PC, or for people who didn’t want or need one,” said National Semiconductor’s Ziv Azmanov, who directs a business unit for such devices. “But they’re more attractive to savvy users who need a supplement to their PC.”

While the technology market has been deflated, it was in far corners of the event, away from the huge tents and banners of the major technology companies, that some good news could actually be found.

Trevor Irving, the marketing manager of Aiptek, a four-year-old maker of digital cameras and other gadgets based in Lake Forest, California, appeared delighted that his tiny booth in a corner of the conference floor was somehow getting healthy attention from the press.

“From what I’ve heard, it’s actually a good corner,” he said.

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