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The Honolulu Advertiser

Posted on: Sunday, February 1, 2004

New Dell products broaden market

By Jerry Gleezon
The (Westchester, N.Y) Journal News

It's no accident that shareholders last year changed the name of Dell Computer Corp. to just Dell Inc.

Dropping the word computer from the name of a business that cut its teeth on the technology may seem counterintuitive. But Dell and its competitors are looking beyond chips and hard drives as they weigh their future.

Consumer electronics are increasingly where Dell, and others like them, want to be.

In September, the Texas-based computer maker unveiled a new line of products, including home-theater projectors, flat-screen televisions and MP3 players.

Dell also introduced its own Web site for selling music. A year ago, Dell introduced its own personal digital assistant to compete with Palm Pilot and other hand-held computer devices.

You don't have to look far to understand why Dell's strategy is heading beyond desktop computers.

PC ReNew, a Rockland County, N.Y., organization that refurbishes hand-me-down PCs and donates them to poor families, has given away more than 250 this year, said Hank Feinberg, who runs the group.

"How much do you need in a computer, and do you need to keep chasing the technology?" Feinberg asked. "The average business just doesn't need anything more in computers than is out there."

Dell holds a 31 percent share of the market for desktop computers in the United States and 17 percent worldwide, spokesman Venancio Figueroa said.

That makes the company the No. 1 seller worldwide and No. 2 domestically, he said. Net revenues almost doubled over the five-year period from fiscal 1999 through fiscal 2003, to $35.4 billion.

Desktops, however, have dropped from 64 percent of Dell's revenue in fiscal 1999 to 53 percent in fiscal 2003. Enterprise product lines, such as servers for businesses, have shown sharper growth, along with notebooks, whose sales grew 67 percent year-over-year in the third quarter, Figueroa said.

The company entered the consumer electronics market based on interest from customers, he said. Research indicated Dell's business model would work as well for TV sets as for computers.

"It's going to be a small business coming out of the chute, but we think in time we'll be able to establish ourselves as a major player," said Figueroa.