Toshiba kills Infinia

Toshiba America says it will discontinue selling the year-old Infinia consumer-desktop PC once it unloads its remaining inventory.

The company has blamed the surge in sub-$1,000 PCs for the decision, saying the rise in popularity of the cheaper systems had drastically changed the market.

But analysts said today that Toshiba's problem may have been closer to home, when the company missed one key market and focused on another that didn't pay off. And users said the company's tech support may have also damaged its credibility with buyers.

A Toshiba representative could not be reached for comment.

Toshiba's Infinia systems -- its first commercial desktop models -- debuted last year to generally favorable reviews. The systems were targeted at the high end of the market, and were loaded with gadgets and gizmos.

But all those gizmos came at a price -- one that users, as it turned out, weren't willing to pay.

"They were a little bit competitive. They tried to wrap high-end features in systems and charge a premium for them, and the market didn't go for it," said Kevin Hause, analyst at International Data Corp. in Framingham, Mass.

But the features Toshiba banked on -- notably DVD -- turned out to be ones that didn't excite users. And Toshiba was late to market in introducing a system with Intel Corp.'s Pentium processor with MMX technology.

"They missed MMX in big way," Hause said. "That really hurt them at the beginning of this year, and things like that are tough to recover from."

The company also generated some bad word-of-mouth through its technical support. Joe Henry, a member of an Infinia users group, said his system had so many problems that he ended up "becoming a computer hobbyist -- although I never intended to."

Henry said the majority of postings on the user group Web site dealt with problems consumers had with the special features Toshiba built into the system, including "InTouch" -- a module attached to the monitor that lets users switch back and forth between the PC, CD, television, radio, telephony, and video components.

"There was no support, no upgrades -- many of us had just shelved it," said Henry.

"Because of the problems I've had with tech support and continuing problems I've heard about, I have not recommended the Infinia to a single person," said Ted Libson, another user group member. "Nobody with the sense God gave a sack full of hammer handles would buy an Infinia these days."

Of course, the new low-priced PC market has changed the landscape for consumer PC dealers, too. One major factor has been the decision of Compaq Computer Corp. to mimic direct marketers such as Dell Computer Corp. in its business model, waiting until systems are ordered before configuring and building them. That has allowed such companies to significantly lower their cost of operations, and follow by cutting prices significantly.

Compaq, the No. 1 PC seller in the world, has made up the profit difference by selling in volume, but other PC companies haven't been able to follow suit as well.

"The expectations of buyers, which are being set by the Compaqs and Dells of the world, is that as a manufacturer you will price aggressively, react quickly to technology changes, and have a full lineup," Hause said. "And unless you're a top-four player, that's going to be very, very expensive to do."

"It isn't even that there's a $1,000 market -- it's that sort of $1,500 price point that's really hot right now," said Mark Specker, analyst at Soundview Financial Corp. in San Francisco.

Specker said Toshiba's problem in the consumer market may have been more related to marketing and management issues than changes in the marketplace.

Hause agreed, saying, "There were absolutely other things going on. A lot of it was operational and there were definite strategy missteps."