THE CASE OF THE PROFITLESS PC

Is it possible to make money selling personal computers to consumers? And if so, how? What resources need to be mustered? Where should they be directed? Those are the questions facing the senior staff of Praxim , a multibillion-dollar maker of desktop computers, in this fictional case study. After years of strong profits, Praxim is being dragged dow n by increasing competition in the consumer segment of the PC market. In response, CEO Tack Thompson has hired a new manager for the consume r division, Linda Marcus, luring her away from a leading packaged-good s company. Linda wants to make Praxim into a trusted brand by putting Praxim's people into retail stores at peak selling times, setting up a n 800 number to answer consumers' technical questions in plain English , and bundling extensively. But the other members of the senior staff are skeptical. The vice president of the commercial division argues th at PCs are a commodity and urges Linda to concentrate on cutting costs . The chief technology officer wants Praxim to concentrate on developi ng the next killer app so that it can charge consumers a premium for n ew technology. The CFO thinks Praxim should cut its losses and mostly give up on the consumer segment. Mindful that continued losses in the consumer segment will pull down Praxim's share price and put his top e xecutives' stock options at risk, Tack is at a loss. Should he try to make money selling PCs to consumers? Can he keep the doubters on his s taff from defecting if he goes ahead with Linda's plant Six commentato rs give Tack their advice.