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Dell Media Computer

DEll to offer a premium brand of PCs
Cox News Service
Friday, June 03, 2005

SAN FRANCISCO - Now that it dominates most other segments of the personal computer business, Dell Inc. wants to create a new one.

This fall, the world's biggest PC maker plans to introduce a "premium" brand of high-priced personal computers aimed at affluent buyers.

Dell vice president Mike George said the new line will include high-powered, entertainment-focused home desktop and notebook computers that will likely cost $1,200 to $3,500.

By comparison, the average price of a desktop PC was $859 at the end of last year, according to technology research firm International Data Corp.

The high-end Dell computers will come with a unique design, multimedia features for home entertainment, and what George called "white glove" service. That might include preferred status on Dell's telephone or Internet-based customer service lines, or even home repair visits by technicians.

George compared Dell's planned introduction of a premium brand to what Toyota did with its Lexus line of cars. He declined to say what the new brand will be called, but said it will be in addition to Dell's current Dimension and Inspiron desktop and notebook lines.

"It's our attempt to capitalize on this emerging idea of a mass luxury market," George said in a meeting with a small group of reporters here.

IDC analyst Roger Kay said the idea might have some appeal.

"I question Dell's ability to bring out something distinctly different and positioned better than what they already have," Kay said. "But it's not making a poor gamble that some people's hubris will lead them to buy what they think is a premium PC.

"If you tell them it's (nicer) and it comes with a butler, you might just find they're willing to pay for it," Kay said.

The premium PC idea isn't new, but currently is limited mainly to niche players in the market.

Apple Computer Inc. customers are willing to pay extra for the company's unique designs, software and other features. So are customers of Alienware, which specializes in high-performance, different-looking computers for video game enthusiasts and others.

With its new high-end computers, Dell — which also sells some of the cheapest computers available — will round out its offerings. But more important, the Round Rock, Texas-based company hopes the premium line will give it a new source of potential profits in a business where margins have become razor-thin in recent years, especially with the cheapest PC models.

Also with an eye toward high-end customers, Dell officials said Thursday they plan to introduce at least three new digital television models this fall, complementing its current line of five televisions.

Tim Peters, Dell's vice president for printing and imaging, wouldn't give specifics, but said the new TVs would be bigger than the models Dell currently offers and would be priced lower than comparable models available today.

'It's going to be great for consumers," Peters said, noting that overall digital television prices are expected to decline by about 30 percent over the next four years, in part because of new factories starting up in Asia.

Dell already claims it sells TVs more cheaply than any other company, because it gets better pricing on flat-screen glass that it also uses for computer monitors and because it sells direct to customers primarily over the Internet or telephone, avoiding traditional retail markups of 30 percent or more.

As a result, according to George, Dell's 42-inch digital TV model sells for less than $3,000, compared with $4,000 or more for a comparable TV at a typical big electronics retailer.

But while Dell may be able to undercut some competitors on price, relatively few consumers know the company for its televisions, George acknowledged.

To counter that and step up competition against market heavyweights such as Sony, Toshiba and JVC, Dell plans to launch a major marketing and advertising campaign for TVs this fall in time for the holiday shopping season.

"That's our big focus," George said. "It's going to be TVs, TVs, TVs."

Bob Keefe covers technology for Cox Newspapers.

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