Hi!!
Here's another great reason to keep buying on the dips...There's such a huge market here and the % gains by DELL are very impressive...One out of five people on earth are Chinese...
Dell Hopes to Lure Chinese Buyers with Cheap PCs
By Tony Munroe
HONG KONG (Reuters) - Top PC maker Dell Computer Corp (DELL.O), known for selling built-to-order computers directly to buyers, is adapting that approach to tap the consumer sector in China -- one of the few healthy markets in an otherwise ailing industry.
In July, Dell introduced its "SmartPC" model, which retails for just $579, said William Amelio, Dell's president for Asia-Pacific and Japan. In a first for Dell, the computer comes with a "fixed configuration" of hardware features.
The company has also adapted its payment system to address the fact that most Chinese consumers don't have a credit card, Amelio said.
Texas-based Dell recently surpassed International Business Machines Corp (IBM.N) as the biggest foreign PC vendor in China with third quarter market share of 4.9 percent.
A year earlier Dell's China market share was 3.1 percent, according to International Data Corp.
"It was important for us to grab the hearts and minds of the consumer," Amelio told reporters at a briefing in Hong Kong. Consumers buy half the PCs shipped in China, which is the world's third-biggest computer market.
"We're trying to drive the cost of a PC down to the price of a television," he said.
Indeed, the lowest-priced model offered by China PC king Legend Holdings (0992.HK), the Tongxi, retails for 5,199 yuan. Both the SmartPC and Tongxi use Intel's 900 megahertz Celeron chip.
"The price is definitely very competitive, even compared with the local players," said Kitty Fok, PC industry analyst at IDC in Hong Kong, referring to the SmartPC.
Still, local firms dominate the consumer PC space, she said.
"For Dell, their key segment is still the corporate."
CHINA AND BEYOND
Amelio said sales of the Smart PC have exceeded expectations in the six cities in which the model is now available, but would not elaborate.
Encouraged by the response, Dell has begun selling the same PC under the SmartStep name in the United States and is looking at other potential markets, Amelio said.
IDC said the SmartPC, which is made under contract by a manufacturer Dell would not identify, accounted for nine percent of Dell's 80,000 desktop PCs sold in China in the third quarter.
Overall, Dell sold 114,000 PCs in China in the third quarter, a 31 percent increase from the second quarter, according to an analyst.
To get around the low penetration rate of credit cards in China, Dell has struck deals with banks to facilitate payments.
And to win over consumers unused to making a big-ticket purchase without having seen or touched the actual product, Dell holds hands-on promotional events in shopping malls. The company is also advertising through newspapers and direct mail.
Before the SmartPC, Dell wooed mainland consumers with higher-priced PCs that were moderately successful, Amelio said.
Nomura International analyst Theodore Teo said Dell, gaining market share in the China commercial segment from U.S. rivals IBM and Hewlett Packard Co (HWP.N), faces a tougher challenge relying on its direct-sales model to attract mainland consumers. He said Chinese consumers don't buy purely on price.
"You definitely need a channel presence for consumers," he argued, referring to retail outlets. "You need to do a lot of educating the buyer in China. You don't just say: 'This is cheap, so but it."'
And Dell, despite gains, remains a bit player in a country dominated by Beijing-based Legend, which has market share of 30 percent and a ubiquitous presence in big city retail outlets.
Shanghai Founder Yanzhoung (600601.SS) and Tsinghua Tongfang (600100.SS) are the second and third-biggest mainland PC vendors, while Dell is fourth, just ahead of IBM, according to IDC. Cheap unbranded PCs also have a sizeable China presence. |
