Dell drops WebPC line
Announced to big fanfare last Nov. 30, the three-model line was the Round Rock, Texas, business-PC maker's first purely consumer-oriented PC. Its oval shape, charcoal-black exterior and built-in online assistance took aim at design-conscious and novice PC buyers.
However, the machines ran into a buzzsaw of component shortages that helped make the debut late for the crucial 1999 Christmas selling season. What's more, at a starting price of $999, they were high-priced compared with rivals' $599 entry-level products.
Dell (dell) had hoped to avoid the pricing comparison by bundling the machines with Internet access, online help and a printer. Last spring, Dell cut the WebPC's price to $799 in part by unbundling previously included Internet service, but analysts said the WebPC never gained sizable sales.
A Dell spokesman wouldn't disclose sales of the line, which he called an "experiment" for the company. The WebPCs were built by outside contract manufacturer SCI Systems Inc. (sci), Huntsville, Ala.
The WebPC's demise comes as Dell and PC rivals are gearing up to compete with an explosion of low-cost Internet devices intended to help novices get online.
The WebPC retreat, while a black eye to Dell's marketing, won't significantly dent its home-PC sales, which contribute about 15% of its $25.26 billion in annual revenue. Dell still offers two lines of combined home and small-business PCs. However, the move signals it won't soon attempt to reach outside its business market. The WebPC withdrawal should be a boost for direct-sales rival Gateway Inc., which has successfully targeted novice buyers with all-in-one packages of PCs, software and printers.
Dell stopped selling the machines on its Web site at the end of June and will dispose of remaining stocks through its online factory outlet, the spokesman said.
The phaseout of the WebPC comes as a coda to the company's April move to emphasize Internet server-computers, and a concurrent shifting of resources away from consumer markets to its traditional business strongholds.
Separately, Dell Chairman and Chief Executive Michael S. Dell sold 6.25 million shares during the last two weeks of June, according to a new Securities and Exchange Commission filing. Dell, the company's largest individual shareholder with an 11.6% stake, or 298.9 million shares, has been regularly reducing his holdings. A Dell spokeswoman declined to comment on the sales.
His sales, at prices of $48.85 to $50 a share, raised $309 million in net proceeds. Earlier this year, Dell sold 10 million shares for proceeds of $565 million, according to Lancer Analytics, which tracks insider sales.