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Dell Unveils Products for the Holidays

Posted on: Friday, 26 September 2003, 06:00 CDT

Sep. 26--Dell Inc.'s announcement Thursday of a new digital music player, an online music store and other products indicated that the computer maker wants to become a major player in the wider consumer electronics market, but not at the expense of a profit.

Analysts are reluctant to even speculate on the impact of Dell's new products because the Round Rock-based company didn't disclose the important details and pricing of its holiday product lineup, which will also include a 17-inch flat-panel television.

Chief executive Michael Dell told reporters in a Thursday news teleconference that the company wants its PCs to be part of an interlinked network of home entertainment products. Mr. Dell said he expects each product to bring the company a profit, and some could turn into powerhouses.

"In 1997 we weren't really in the consumer PC business, and now we're No. 1 in the largest market in the world," the United States, he said. "It's conceivable we could do the same in these other categories as well."

Dell's pricing decisions, which the company plans to reveal over the next several weeks as it begins selling the products, could have a major impact on the market, forcing rivals to catch up with a cut-rate low price.

More likely, Dell will set a price slightly below the average market rate for each product, gaining market share steadily and collecting as much profit as it can, said Rob Enderle, principal analyst of the Enderle Group, a California research firm.

"They know how to position themselves at the high-volume, high-value segment of the market," Mr. Enderle said. "They're not the cheapest, but they hit the points where price and volume tend to optimize."

Of course, consumers buy products for qualities other than price. Hewlett-Packard Co., the computer industry's other titan, plans to beat Dell by offering better features and making technology easier to understand, said Chris Morgan, who oversees H-P's worldwide consumer strategy.

"When it comes to innovation and leading in the consumer space, I see H-P being way out in front," Mr. Morgan said. "Dell has an IT model. The customer is expected to be the expert in technology, expected to be the system integrator."

H-P has launched a campaign and is working with retailers to introduce new products and educate consumers on how to more easily use their technology, Mr. Morgan said. He pointed to the ways H-P has made its digital cameras, printers and computers work together to make digital photography easier.

Dell said Thursday that it, too, wanted to make technology easier for consumers, but didn't offer many specifics. What the company did disclose:

The digital music player, called the Dell Digital Jukebox, or Dell DJ, will be small, rectangular and capable of holding thousands of songs. Dell released a photo of the product, which looks like a hard-drive-based music player similar to Apple Computer Inc.'s iPod.

Dell will sell music over the Internet, and the music files will contain coding that protects them from copyright infringement. The products will only be designed for computers that work on Microsoft's Windows operating system.

The flat-panel television will be a 17-inch liquid-crystal display, capable of being used as a TV screen and as a computer monitor.

Dell will release an update to its Axim handheld organizer that includes optional embedded technology for the Wi-Fi wireless Internet standard.

The company also plans to introduce software to manage digital media, such as photos, music and videos. And Dell will add one product each to its lines of digital projectors and gaming PCs.

Dell shares rose 2 cents to $33.92 on Thursday.

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(c) 2003, The Dallas Morning News. Distributed by Knight Ridder/Tribune Business News.

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