Here is today's WSJ article on the Dell web pc. Interesting that Dell is not building it and it will not be configurable.
Regards,
John
Dell Takes Aim at the Home Market
With WebPC; Won't Come Cheaply
By GARY MCWILLIAMS
Staff Reporter of THE WALL STREET JOURNAL
For Dell Computer Corp., it's terra incognito.
Dell, the corporate personal-computer powerhouse, Monday
plans to launch the WebPC, a sleek Internet computer aimed
squarely at the living rooms and dens of American consumers.
Produced in a crash program by the executive who revived Dell's
notebook PC business, the WebPC smashes much of the
formula that has made the Round Rock, Texas, company the
most copied PC maker of the decade. Ads for the new device
stress style and ease of use, not the usual megahertz and
megabyte patter. Developers even bypassed Dell's vaunted
factories. Everything from design to production was done by
outside suppliers to save time.
The result is a trio of
oval-shaped and color-accented
PCs packaged with free Internet
service for a year, online help
and a printer. Though it is, in
part, an answer to the $599 and
$799 home PCs from rivals
Gateway Inc., Compaq
Computer Corp. and
Hewlett-Packard Co., WebPC
won't break new ground in
pricing. It will cost $999 to
$2,349, reflecting the bundled
services and a spike in component prices that caught Dell
off-guard.
How this new line came into being reflects Dell's struggle to reach
novice buyers and the low-cost home-PC market. To separate
the WebPC from its existing PCs, Dell created a Web Products
division under John C. Medica, a vice president who had led
development of the hugely successful Latitude notebook PC.
Grand Experiment
The division came into being only after slowing revenue gains
made Dell look vulnerable without a low-cost, consumer PC line.
In many ways, it represents a grand experiment to gauge whether
Dell can play in the consumer-driven market for Internet
appliances.
Van Baker, an analyst with researcher
Dataquest, a Gartner Group Inc.
company, called the WebPC "a good,
cautious approach" to reaching new
customers. He said Dell's pricing is
comparable with similar machines from Gateway and NEC Corp.
when Internet service and printer prices are added. However, Mr.
Baker predicted Dell would eventually unbundle Internet service to
lower its cost and broaden the WebPC's appeal.
WebPC developers are expected to carry their ideas to other
Dell PC divisions, says Mr. Medica. He also envisions the
division tackling screen-phones and e-mail devices. "This is a
bold first step on a path," he says.
In crafting the line, designers often had to defend their choices.
Executives questioned everything from offering free telephone
help to the cost of using color photos in assembly instructions.
At one point last summer, the project appeared doomed by the
market's embrace of ultra-cheap PCs and $400 rebates for
Internet service. "We were always questioned, 'Is this the right
path? Are we building the right product?' " says Tony Bonadero,
the WebPC's 33-year-old marketing manager. He fired back with
consumer tests showing a preference for PCs richly bundled with
services.
Sailing Buff
The WebPC team also had a powerful sponsor in Mr. Medica, a
sailing buff who wears jeans and boat shoes at work. In 1993, he
canceled an impending notebook PC as inadequate, forcing
developers to start anew. The resulting Latitude quickly became a
corporate hit, making Dell No. 1 in U.S. business sales of
notebook PCs.
This time, Mr. Medica ran interference with the company. For
instance, he helped convinced Dell's factory bosses that contract
manufacturer SCI Systems Inc. could handle all manufacturing
and delivery without giving away Dell's lean-inventory secrets.
The involvement of Mr. Medica, formerly chief operating officer of
Dell Japan and most recently Dell's head of world-wide
procurement, also attracted a team of Dell strivers, many of whom
had been involved in past product launches. Mr. Bonadero, for
instance, has been involved in some 20 products during his 12
years at Dell. Margo Winter, who devised the WebPC.com online
store and merchandising campaign, had managed the marketing
for the latest release of the company's Dell.com Web site
(www.dell.com).
The team regularly worked nights and weekends to complete the
effort. Tim Cox, a 39-year-old software engineer who oversaw
design of the online help program, fielded calls on his cell phone
from designers in the evening while coaching his son's Little
League team.
Riding Herd Over Suppliers
Mr. Medica also rode herd over such suppliers as Microsoft
Corp. and Motive Communications Inc. Ben Dakhlia, a Motive
software engineer, says it wasn't unusual to be asked to attend
meetings on Saturdays and Sundays. "Since I started on the
project in July, I've had a total of four days off," and only then for a
family emergency, says Mr. Dakhlia.
By working with Microsoft to streamline Windows 98 and by
pre-installing the Internet service registration, Dell says it will take
less than 10 minutes from opening a WebPC box to cruising the
Internet. The new Dell brand will test bundle many common
options, such as printers, Internet-access service and online help
features. Dell hopes this bundling approach will prove popular
with buyers, stimulating sales.
The higher package pricing is a sign that Dell has modest sales
goals for the WebPC. It is announcing just three models to hold
down costs, and plans to follow with three to four more models in
the spring. Dell expects sales next year to account for only 10% to
20% of its total PC sales.
Dell hopes built-in service will transcend the limited hardware
offering. Indeed, WebPC targets novices with features like factory
loading of Internet preferences and printer software. WebPCs
sold with a flat-panel display are delivered in a box that splits
vertically, revealing an upright PC with its monitor and keyboard
attached. "We spent oodles of time getting it to pull out of the box
easily," says Ms. Winter.
The WebPC will do more than test Dell's ability to design new
hardware and service packages. It will experiment with new
advertising and marketing techniques. WebPC will have its own
Internet site that allows purchases to be completed in three to four
clicks and a slogan: Born to Web. And Dell hopes the Web site,
with plenty of color photos showing how to assemble and use the
WebPC, will overcome the resistance of some buyers who might
prefer to see the product in a store.
Dell's advertising eschews its historic appeal to PC enthusiasts
via PC magazines. Among the plans: A billboard in Times
Square, ads in Rolling Stone and on Internet sites such as
iVillage.
Write to Gary McWilliams at gary.mcwilliams@wsj.com
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