Posted on: Sunday, September 28, 2003

Dell ventures into market for consumer electronics

By April Castro
Associated Press

AUSTIN, Texas — Dell Inc. is entering the consumer electronics market with television sets, digital music players and an online music service, opening yet another front in its war with rivals Gateway Inc. and Apple Computer Inc.

"In extending into new categories, it gives us another opportunity to revolutionize products on behalf of our customers," CEO Michael Dell said last week.

All of the products will be released this fall, in time for the holiday season, Dell said. Dell did not release pricing or other details.

The shift is part of a broader strategy by Dell to expand its highly efficient distribution model — which has consistently squeezed other computer makers — into other markets, such as printers. Gateway has also branched into consumer electronics after suffering brutal losses in the PC market.

Dell's flat panel TV will be launched Oct. 21. The Texas-based company also plans a liquid-crystal display screen that will let consumers watch TV and streaming video, play games and use PC applications. The wide format, 17-inch display can be used as either a TV or as a computer monitor and can handle high-definition TV.

The Dell Digital Jukebox, an MP3 player, will be released in conjunction with the Dell Music Store, an online music site where customers can download music.

The Digital Jukebox takes aim at Apple's runaway success with its online iTunes Music Store and iPod music player. ITunes has sold more than 10 million songs at 99 cents each since its April 28 launch, and Apple has announced plans to release a version of iTunes for Windows before the end of the year.

Dell's foray into the consumer electronics market will hurt Apple and Gateway the most, "since much of their recent momentum (and future strategies) have hinged on similar offerings," analyst Joel Wagonfeld of Banc of America Securities told clients.