Packard Bell Co-Founder Plans Relaunch of AST Brand via Internet

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One of the pioneers of offering low-cost personal computers through the retail channel is seeking to make his mark in the world of direct sales of PCs via the Internet by bringing back the AST brand.


Beny Alagem, the co-founder and former chairman and chief executive of PC maker Packard Bell NEC, has acquired the AST Computer brand and certain intellectual property from South Korean conglomerate Samsung Electronics. The terms of the acquisition were not disclosed, although a spokeswoman for AST said the company's intellectual property has been valued at about $200 million. Samsung -- a privately owned consumer electronics company with estimated annual sales of about $87 billion -- is retaining a 25 percent interest in Irvine, CA-based AST through a U.S. subsidiary.


In the late 1980s, AST Research Inc. had been a prominent supplier of desktop computers, notebook computers and computer networks to small and mid-sized businesses. The company has since faded from the spotlight, the victim of a cost structure that was too high for the prices it was charging its customers, analysts said.


Alagem plans to relaunch the company as AST Computers with a new, highly specialized line of PCs for both home and office by mid-year, coupling the machines with a variety of Internet services.


The new company hopes to take advantage of the fact that most PC owners only use a small fraction of the capabilities of their machines, said Mike Plaksin, vice president of marketing and sales for AST Computers. "We're looking at making products that are specialized for certain functions," he said.


The company plans to market AST desktop computers, notebook computers, servers and Internet services through a variety of channels, including the Internet and retail, with a focus on both home users and small- to mid-sized businesses.


Alagem had a reputation as an aggressive, "take-no-prisoners" businessman at Packard Bell, said analysts.


"This sounds like its going to be his new hobby now," said Jim Garden, a director at research firm Technology Business Research Inc. "But the market dynamics have changed significantly since he launched Packard Bell."


Increasing competition among makers of low-priced computers and the proliferation of bargain-oriented Internet sellers like Buy.com and OnSale Inc. "are just ripping the guts out of the margins on PCs," he said.


During Alagem's tenure at the helm of Packard Bell, he grew the company from a start-up to a major force in the PC industry, primarily by forging strong relationships with retailers and by maintaining low prices. The company claimed to be the largest seller of PCs by unit count in the country in 1994, but it soon began struggling against retail-brand rivals and direct sellers like Gateway and Dell. Packard Bell reportedly had not been profitable for several years when Alagem resigned in July of 1998, citing differences with some of the company's investment partners.


"Beny Alagem has always played business operations close to the edge," said Garden.
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