Dell is about to enter "free PC" firms' space.
regards
THE RAGING BULL'S CYBERSTOCK INVESTOR REPORT
June 11, 1999
"Now Read By Over 130,000 CyberInvestors Weekly"
Editor: Matthew W. Ragas
ragingbull.com
Is Dell preparing to embrace the free PC craze?
Dell Computer (DELL) this week officially
launched DellNet, a free Internet
service in the United Kingdom, with plans to roll
out similar free ISPs in
Germany and France shortly. In the U.K., DellNet
will rely on British
Telecommunications' (BTY) networks, and integrate
content from Excite At
Home's (ATHM) Excite portal site into the
service. The DellNet software
will be pre-installed on Dell computers sold in
the U.K., and will be
available for download on the company's U.K. Web
site. Of course, free
ISPs are nothing new for Europe or the U.K. Over
50 free ISPs have popped
up in the U.K. in the past year. In fact, free
ISP Dixons' Freeserve is
now the largest Internet provider in all of the
U.K. That's right. With
1.5 million customers, Freeserve is actually
bigger than AOL in the U.K.
I believe Dell's move foreshadows the company's
entrance into the U.S. ISP
business somehow in the next few months. At the
Paine Webber (PWJ) tech
conference this week, a Dell executive told the
audience that Dell sees
"opportunities outside of the box that we intend
to pursue." However, I
don't expect a domestic ISP offering by Dell to
be "free." More likely,
Dell will offer a deeply discounted PC
($200-$250) to customers who agree
to sign up for the DellNet ISP at $20 a month or
so for a specified number
of months.
In a conference call last month, Dell founder and
Chief Executive Michael
Dell told analysts that Dell was exploring plans
to make "the PC look like
a cable-TV subscription." In other words, a
business model that would give
Dell a consistent monthly revenue stream from its
PCs, much like a
financial product. Smart, Michael Dell. Very
smart. If any of the box
makers has the ability to do a complete
180-degree turn of its business
model in the face of declining PC prices, it
would appear to be Dell.
This is bad news for upstart "free PC" firms like
Gobi, Enchilada and
Free-PC.com. If I'm observing Dell's recent
comments and moves correctly,
the direct selling monster from Austin, Texas, is
about to enter their
space. Not only would this aggressive move
attack the free PC upstarts,
but it would place Dell closer to direct
competition with the portals and
ISPs.
As I noted a few months back in this report, many
of the box makers seemed
to be positioning themselves to offer a full
suite of content, e-commerce
and connectivity services. I believe portals and
community sites still
have a chance to fight back against the box
makers by leveraging their
existing millions of eyeballs and launching their
own free ISPs like
NetZero, but no portal seems to be making a move
yet.
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