Dell to sell no-name computers to dealers

By Connie Mabin, Associated Press, 8/20/2002 17:55


AUSTIN (AP) Dell Computer Corp., which has been successful selling
its personal computers directly to customers, plans to sell generic
computers to dealers who in turn sell the PCs to small businesses,
the company said Tuesday.

The so-called white box market is a new one for Dell, which continues
to try to grab a bigger share of computer sales and revenue.

''Dell saw an opportunity,'' said company spokeswoman Amy King.

In the white box market, a dealer puts together computer parts to
make and sell a customized machine, or resells generic computers.
These kinds of sales account for about 30 percent of the PC market,
according to IDC, a Framingham, Mass.-based market research firm.

Beginning Friday, Dell will sell unbranded personal computers known
as White Box D510 to dealers who serve businesses with 100 employees
or fewer, King said.

''It would appear to be a smart move for them having become the
dominant player in the online direct consumer segment,'' said Dan
Hess, vice president of comScore Media Metrix. ''This strategy
affords them a way to penetrate the still-significant percentage of
consumers that is not fully comfortable purchasing a big-ticket item
like a computer on the Web.''

The price starts at $499 for a unit with an Intel Celeron processor,
CD-ROM and floppy disk drive and Windows XP. A monitor is not
included and the PCs can be upgraded upon request. Each computer
includes a one-year warranty on parts and telephone service for the
dealer.

Selling the computers will allow the Round Rock-based company to make
as much money as it would selling a Dell brand PC and is estimated to
bring in about $380 million, or 1 percent, of Dell's total revenue,
King said.

King said Dell wanted to focus on local dealers who build or purchase
unbranded PCs for small businesses because it realized the market has
been quickly growing.

Small businesses typically cannot afford or do not have the
technological resources to have internal IT departments and depend on
the local dealers. Dell can help keep prices low for dealers while
providing high-quality products, King said.

Competitor Hewlett-Packard Co. said it was unimpressed with Dell's
dip into the white box market.

''Small businesses won't be fooled. For a similar price, they can get
superior branded products with real service and support,'' HP said.

Kevin Hunt, a Dell analyst for Thomas Weisel Partners, said Dell's
move won't greatly affect competitors like HP. Dell's target may be
white box sellers abroad, he said.

''They're starting to test a way they can go over the white box guys
in other countries like in Asia because to get a bigger share they're
going to have to go after those guys,'' Hunt said.

On the Net:

Dell Computer Corp.: http://www.dell.com


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Richard Jobity, Trinidad and Tobago
ICQ: 5183191; http://chanderspot.go.to

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