Dell Desktops Will Soon Take on New Meaning

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Dell Computer Corp., Round Rock, TX, is planning to expand its Gigabuys Web site offerings with office furniture.


Dell is "absolutely looking at selling desks and chairs and will do that with a solid partner," said Bob Langer, a director of Dell Online. "This might get some visibility over the next couple of quarters."


Dell is also hoping to introduce "boutiques along interest lines," such as digital photography and home networking, next month, a company spokesperson said.


This will further increase its product range while introducing new stock along existing lines. The company already expanded offerings on Gigabuys, which debuted in April selling printers, fax machines and other office equipment peripheral to PCs, by adding consumables such as toner cartridges two weeks after the launch.


One reason for the expansion is "Dell is heading toward a downtrend" in personal computer sales, according to one analyst. This downtrend will start around 2000 or 2001 as the average selling price of a PC continues to decrease.


And the sub-$500-PC road is a path CEO Michael Dell has said he will not travel. At the Networld and Interop show in Las Vegas in May, he joked that he would consider selling a sub-$500 PC only if people are happy with no components, no warranty and no service.


Another problem with PC sales is the frequency of customer purchases. Business consumers typically upgrade about once a year, which means there is not a lot of opportunity for communication between Dell and its customers.


So one motivation for expanding the site with products that do not generate a large amount of revenue would be to enable Dell to remain in contact with customers, learn more about them and personalize their buying experiences, said Ken Cassar, a senior analyst at Jupiter Research, New York.


"Customer acquisition costs on the Web really mandate that you get the most mileage out of your brand name," Cassar said. "So while there is a risk of the 'Jack-of-all-trades-and-master-of-none' syndrome, the economics of shipping and handling [charges] will be enough to encourage customers to shop on one site."


Dell cited customer requests as the reason for expanding offerings. "It's an interesting proposition that our customers are certainly requesting. And it's an issue that any e-commerce site is wrestling with today," said Chris Gehring, a director of Dell.com.


Expansion is also likely to continue into other product and service areas after July's announcement of shopping boutiques, Gehring said.
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