Dell taps market for 'white box' PCs
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This week, Dell will begin offering a special, low-price desktop PC to distributors that cater to small businesses, typically companies with less than 100 employees, the company confirmed Tuesday.
The Texas-based PC maker is embarking on the new plan as a way to enter the "white box" market, which it estimates to be worth about $3 billion. White-box PC sales have grown quietly over the last five years to represent roughly 30 percent of the market, according to a recent IDC report. These PCs are assembled by small outfits ranging in size from one-person or family-owned shops to larger, regional PC sellers.
By offering the PCs to distributors, Dell essentially joins the party, allowing the companies to sell a $499 unbranded computer as they would if they'd made it themselves. Meanwhile, Dell can offer the dealers discounts, favorable leasing terms and other sales incentives, representatives said.
Even though any given white-box maker is tiny compared to the heft of Dell's 30,000-plus employees, the collective market represents an untapped portion of worldwide PC shipments. In many respects, white-box makers are one of Dell's biggest competitors in a consolidated PC industry as it tries to gain market share in the worldwide PC market.
White-box markers are known for offering low prices, but they have also expanded in the last few years to provide technical support, network installations and other services needed by small and medium-size businesses, making them even more formidable competition. These services, as well as their close proximity to their customers, helps generate sales as well.
To reflect previously uncounted white-box units, IDC increased its estimate for the size of the entire worldwide PC market in 2001 by 8 million units. As a result, it also lowered the relative market share positions of the biggest vendors, such as Dell.
Dell sold PCs through dealers, including retailers, in the early 1990s before making a total switch to selling directly to customers.
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