Dell Computer migration to Internet moves ahead
MINNEAPOLIS, June 15 (Reuters) - Dell Computer Corp.
<DELL.O> said Tuesday it is about one-third of the way to
becoming an Internet-based direct marketer, a move it said
gives it an advantage as computer prices fall.
Speaking to the U.S. Bancorp Piper Jaffray investment
conference here, Dell senior vice president Joe Marengi said
the company is profiting from doing sales and service, and
linking with its suppliers, on the Internet.
"Very few people outside Dell truly understand the
significance," Marengi said. "We feel we can double the core
advantages of the direct (business) model through the
utilization of the Net."
Dell is the No. 2 U.S. computer maker but the top seller of
computers directly to the end user, skipping over retailers and
other sales channels. It began its transition to what Marengi
called the Internet direct marketing model about three years
ago.
Dell is bringing in about $18 million in sales daily on the
Internet, about 30 percent of Dell's total business. Marengi
said online revenue has risen more than 271 percent over the
last 12 months and the company expects it to continue to rise.
Marengi noted that Internet sales save the company money as
there are no commission payments to sales representatives.
The company has seen customer service phone calls on order
status drop by 75 percent and technical support calls fall 25
percent -- calls that Marengi said cost the company $3 to $8
each. Dell's service Web site gets more than 400,000 hits a
week, he said.
Through a secure extranet, Dell has online links with its
suppliers, enabling it to manage the logistics, availability,
cost and quality of components it buys. Some 46 suppliers
representing 95 percent of the company's component base work
with Dell via the Internet.
Dell announced Tuesday it is marketing its first computer
priced below $1000, the Dimension L series, with prices
starting at $899.
In the near term, Marengi said the company expects strong
demand and "rational" prices, as seen in the first quarter, and
gross margins remaining largely stable.
"We have no reason to believe anything will change before
now and the end of the year," he said.
Shares of Dell were trading up $1.00 at $34.31 on turnover
of more than 9 million shares.
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