Media: Microsoft makes first move into British PC market

The battle for supremacy in the personal computer market is intensifying with the high street electrical chain Dixons about to start selling a PC branded with the famous Microsoft name.

Michael Harrison reports.

In two weeks' time, a personal computer will go on sale in Britain that not only runs on Microsoft software but also carries the Microsoft brand. This is not the first time that Microsoft has lent its name to a PC - it has carried out similar experiments before, twice in the United States and once in Poland.

But this will be the first time it has happened in Britain, and the computer industry expects it to generate a great deal of interest. Microsoft, founded by the legendary Bill Gates, is teaming up with Viglen Technology, the company that rose from the ashes of Alan Sugar's Amstrad, to market the new range of PCs. The Viglen HomePro Microsoft range will be aimed squarely at first-time buyers and will be available throughout 250 Dixons, Currys and PC World stores.

Microsoft long since grew into the world's biggest software producer, outstripping rivals such as Lotus and Word Perfect. But now it sees an opportunity to drive home its dominance even further.

David Svendson, managing director of Microsoft Limited, says: "It marks an important step in the way we are able to reach our customers who need software for use in the home. By working with Viglen Technology we can introduce customers to our top titles and begin to have a longer relationship."

The Viglen-Microsoft PC is being manufactured at a purpose built factory in Alperton, west London and output is projected to reach 50,000 in the next year. It will sell for between pounds 1,599 and pounds 3,500 and will be ready to run on Microsoft's Windows 98 when that is launched.

The deal represents a UK first for Microsoft, but it also marks a change in strategy for Viglen, which is now the country's biggest manufacturers of PCs and has, until now, supplied direct to customers.

When Amstrad acquired Viglen three years ago it also stopped selling its computers through high street stores, exasperated at the margins retailers demanded and switched to direct sales. Now, however, Viglen is renewing its relationship with the retailers who still account for two-thirds of all computers sold.

The way computers are sold is rapidly changing. Earlier this week, PC World launched a direct sales operation while the computer manufacturer Compaq has also started selling direct. Meanwhile one of the big players in the PC-direct market, Tiny, has opened some UK retail stores.

Bordan Tkachuk, Viglen's chief executive, says: "If we can get a foot in both camps we can sell to the first time buyer who prefers to shop in the high street and the experienced user who is more at ease buying direct."