More E-tailing buy DELL--- wanna bet their stock goes UP today?!!!
Dell To Introduce Online Consumer Superstore
By Eric Auchard
NEW YORK (Reuters) - Dell Computer Corp. (Nasdaq:DELL - news), the world's top direct seller of
personal computers, plans to diversify Wednesday by introducing an online superstore to sell
computer-related products of other firms.
Dell's consumer shopping site, to be known as Gigabuys.com (http://www.gigabuys.com), marks a
renewed push by the direct computer distributor into consumer, as opposed to business, markets,
where it will be selling PC software, peripherals and accessories.
Currently only 15 percent or so of Dell revenues comes from consumers, with the remaining 85
percent coming from business sales.
More fundamentally, the move marks the evolution of the Round Rock, Texas, company away from
its roots as principally a manufacturer and distributor of PC hardware and peripheral components
products, analysts said.
Dell itself sees the Internet store concept as a way to reinforce ties with existing customers, building
repeat sales of related computer items, and attract new customers, all with the goal of winning
follow-on PC box sales.
''Gigabuys.com offers all online computer shoppers a convenient way to buy all the software and
accessories they need for their computers,'' Michael Dell, chairman and CEO, said in a statement
obtained late Tuesday.
''This includes not only Dell's existing customers, who we hope to deepen our relationship with
through www.gigabuys.com, but also customers who haven't yet bought from Dell and are looking for
the best online shopping experience.''
Eventually, analysts said, Dell could resemble a service company or an online retailer of various goods
rather than a manufacturer if prices -- and profit margins -- on Dell's classic PC boxes continue to fall.
Dell is not alone. Rival direct PC supplier Gateway Inc. has already expanded its consumer offerings
beyond classic hardware sales by introducing its Gateway.net Internet service, offering customer
financing, and other programs.
Last week, Gateway joined forces with NECX, a privately held online electronics store, to develop a
new site, called SpotShop.com (http://www.spotshop.com), that plans to sell Gateway-branded
products, along with software and hardware from other suppliers. In return, Gateway acquired
roughly a 20 percent stake in NECX.
While Gateway has turned to outside partners, Dell is to build its own sites, developing the
Gigabuys.com with an in-house team that also is working on projects for its small, medium-size and
large business and government markets.
Top personal computer maker Compaq Computer Corp. (NYSE:CPQ - news) is pursuing its own
Internet sales plan, but conflicts among key retail sales partners and newer Internet-only retailers have
led it to suspend sales to the newer outlets temporarily.
Industry analysts see a shift in the PC business to sales of consumer electronics and other low-cost
commodity goods instead of high-powered, costly PCs, even as online hardware sales rise to $15
billion in 2003 from $1 billion in 1998.
''This is the beginning of companies like Dell and Gateway migrating from being manufacturers to
retailers that sell their own products and, more importantly, those of others,'' said Eric Brown, an
analyst at market research firm Forrester Research.
Dell said its goal was to create the top shopping destination for computers and related products on
the Web.
Gigabuys.com is set to offer initially more than 30,000 computer-related products and services from
850 companies. Later this year, Dell plans to offer more than 40,000 products on the site, it said.
The consumer site has printers, digital cameras, hand-held computers like 3Com Corp.'s Palm series,
scanners, games, and imaging and educational software, as well as such business products as cables,
computer docking stations and network equipment.
Unlikely some shopping sites, which force buyers to consider only selected goods -- making it
difficult to comparison-shop -- Dell promises to allow shoppers to search for products by category,
manufacturer, product model, features and price.
Dell promised to offer extremely combative pricing on popular products.
Later this year, Dell plans to extend the superstore concept through customized versions of the site
delivered to its corporate buyers and other customers, Dell said.
Gigabuys.com will be available initially in the United States and will be extended internationally later
this year, it said.
The Internet superstore is part of Dell's commitment to generate 50 percent of revenues through the
Internet within 18 months. Currently, its Dell.com site sells $14 million each day over the Internet, or
20 percent of total revenues.
Ahead of Dell's announcement, personal computer stocks continued to fall as investors reacted to
recent signs of weakening first-quarter PC sales following Compaq's warning Friday of a sales
slowdown during the first six weeks of 1999.
Dell slid another $2.50 to $78.06 in active Nasdaq trading, while Gateway fell $2.56 to $68.44 and
Compaq gave up $1.59 to close at $31.94 in composite U.S. stock exchange trading. |
