The world's largest PC maker said its SmartStep PC, which comes as a one-size-fits-all system complete with monitor, aims to woo U.S. customers that typically shop for PCs in chain stores. Starting at $599, the PC is the lowest-price home PC the Austin, Texas, company has ever sold.
The PCs will be built by Taiwanese PC maker Mitac International Corp., which has supplied low-cost desktop PCs or hand-held computers to Dell rivals Compaq Computer Corp. and Hewlett-Packard Co. Mitac will ship directly to customers to avoid inventory costs.
Most PC makers are losing money as consumers put off new PC purchases and corporations reduce computer budgets, though Dell is a notable exception. Retail PC sales this year are running as much as 40% below year-ago levels, according to researcher NPD Intelect. Analysts say this Christmas could be the most disappointing yet for PC manufacturers.
A SmartStep 100D with an Intel Corp. one gigahertz Celeron processor, 20 gigabyte disk drive, 128 megabytes of memory, 15-inch monitor and keyboard will sell for $599 with a 90-day warranty and for $649 with a one-year warranty. Dell's more-customizable PCs are sold with similar equipment for $699.
Analysts said Dell is gambling that the new model can draw buyers to its phone lines and online services from retail stores without undercutting demand for its higher profit PCs. If it succeeds, it would intensify the pressure on already suffering rivals.
But there's a risk. "Dell may end up pulling sales away from itself, cannibalizing its own sales," said Charles R. Wolf, a PC analyst at Needham & Co.
The SmartStep marks Dell's second attempt to introduce retail customers to its direct business. In late 1999, the company brought out the WebPC, a machine marketed as easy to install and use for novice PC buyers. Dell discontinued the product less than a year later after weaker-than-expected sales.