Toshiba holds back on updated notebooks

In response to the slowdown in demand for new PCs, Toshiba decides to forego a second quarter notebook launch and will release updated models in a month.

After skipping a second-quarter launch of updated notebooks, Toshiba will release four revamped models next month.

Carl Pinto, Toshiba's director of notebook marketing, said Thursday that the company consciously decided to hold off releasing the updated consumer notebooks until the third quarter given the poor climate for PCs.

"We figured the second quarter would be a quiet one," said Pinto, who added that the company will officially unveil the new products Monday.

PC makers, including Toshiba, generally update their notebook lines on a quarterly basis to incorporate new technologies and adjust prices. However, earlier this year Toshiba altered its normal strategy and decided to forgo new releases for the second quarter.

The move has raised eyebrows among some analysts, who say PC manufacturers must decide what their priority is.

"Everyone is making that choice right now--market share or profit," NPD Intelect's Stephen Baker said. "I don't think anyone knows which is right, now. We won't find out until (the economy) turns around. It's going to be awhile before we know if being aggressive is the right thing to do."

Dell Computer, for one, has gone for the jugular by reducing costs and lowering prices to build market share.

"But I think the jury is still out as to whether that's the absolute right thing to do in this kind of market," Baker said.

Toshiba's position is that market conditions are exceptionally poor. Considering that the first and second quarters tend to be the slowest ones in terms of sales, Pinto said, Toshiba believes that the move to hold off on new products made sense. The company is also laying the groundwork for the third quarter, which historically has strong sales from back-to-school buyers.

"We thought that with new products coming in the third quarter, anything still in the channel from the second would stall sales of the new units," Pinto said.

The company took a similar position last year, when instead of updating its entire line of consumer notebooks it only refreshed a few of them.

The main goal of the strategy change is to better manage inventory, Pinto said.

Alan Promisel, IDC's notebook analyst, agreed with the company's decision.

"The name of the game is keeping inventory lean and mean," he said. "And Toshiba seems to be doing a good job at that." Toshiba has two to four weeks' worth of inventory, while the industry average is around six to 10 weeks, Promisel noted.

But keeping inventory tight has its downsides. They can include a hit in market share and the perception by consumers that a company's products do not offer the "latest and greatest" features, said Matt Sargent, an ARS analyst.

Others say that Toshiba's position in the consumer market has been rocky as of late and that this decision could be ill-timed.

"Certainly in the retail space, (Toshiba's) market share has been under assault. They need to be careful about that because it can just evaporate," Baker said.

Toshiba will announce details about the new units Monday. The notebooks are expected to hit retail shelves in mid-July.

Among the four new notebooks, Toshiba will add the Satellite 3005, which will be its first entry into the thin-and-light category for consumers. Competitors such as Compaq Computer and Sony have been offering similar notebooks since early in the year.

The 5.5-pound Satellite 3005 notebooks will start at US$1,799 and will come with a Pentium III processor with clock speeds of up to 1GHz, Pinto said.

The Satellite 2805 and 1800 models will also come with Pentium III processors and will start at US$1,999 and US$1,299, respectively. The Satellite Pro 4600 series will start at US$2,099 and target the small-business market.

Staff writer John Spooner contributed to this report.