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Dell Talks Shop
By Alexei Oreskovic
TheStreet.com Staff Reporter
5/23/2006 4:39 PM EDT
URL: http://www.thestreet.com/tech/hardware/10287623.html
It's a season of change for Dell (DELL:Nasdaq) .
The world's No.1 PC vendor, long known for its policy of selling directly to customers, will open a pair of retail locations in Dallas and New York later this year, according to news reports.
The 3,000-square foot stores will not stock any inventory, but rather will showcase about 35 different Dell products and allow customers to customize and order merchandise for later delivery, according to a report in the Austin American-Statesman.
While the stores are only pilot programs, the move marks a significant change of tack for Dell and comes a week after the company announced another major change to its business model.
The Round Rock , Texas, company said in its quarterly earnings last week that it would include Advanced Micro Devices (AMD:NYSE) Opteron microprocessors in a limited number of its computer servers.
Dell's growth has stalled recently, as the company has struggled in the face of stiff competition from the likes of Hewlett-Packard (HPQ:NYSE) , Lenovo and Acer.
The fact that Dell only sold computers featuring Intel (INTC:Nasdaq) processors was widely considered a disadvantage, given that many industry insiders believe that AMD's current line of processors are technologically superior and more power-efficient.
In the first quarter, Dell's revenue was up 6% year over year, compared with growth of 16% and 21% in its two previous first quarters.
Dell executives have insisted that they would stick with the direct-sales model that the company pioneered.
Asked whether Dell would consider selling PCs through the retail channel during a conference call with analysts last week, Chairman Michael Dell answered tersely "We're the direct company."
The retail plan has proven particularly successful for Apple Computer (AAPL:Nasdaq) , which sells its iPods and Mac computers through 136 Apple stores worldwide.
By unveiling its own stores, Dell could provide customers with a chance to touch and feel its various products and to receive answers to technical questions from a knowledgeable sales staff.
This could allow Dell to reach a broader slice of consumers and small business buyers, according to Moors & Cabot analyst Cindy Shaw.
But the approach to not actually stock merchandise could backfire if customers expect to be able to leave the store carrying a new PC, wrote Shaw in a recent note to investors.
A Dell representative was not immediately available for comment.
The fact that Dell is experimenting with retail concepts also raises questions about the company's confidence in the direct model, wrote Shaw.
"We view Dell's store pilots as either an acknowledgment that retail matters in some segments and/or a signal that management will try anything that might stimulate revenue," wrote Shaw.
Shares of Dell the regular session down 1.19%, or 29 cents, at $24.09.
Dell Talks Shop
By Alexei Oreskovic
TheStreet.com Staff Reporter
5/23/2006 4:39 PM EDT
URL: http://www.thestreet.com/tech/hardware/10287623.html
It's a season of change for Dell (DELL:Nasdaq) .
The world's No.1 PC vendor, long known for its policy of selling directly to customers, will open a pair of retail locations in Dallas and New York later this year, according to news reports.
The 3,000-square foot stores will not stock any inventory, but rather will showcase about 35 different Dell products and allow customers to customize and order merchandise for later delivery, according to a report in the Austin American-Statesman.
While the stores are only pilot programs, the move marks a significant change of tack for Dell and comes a week after the company announced another major change to its business model.
The Round Rock , Texas, company said in its quarterly earnings last week that it would include Advanced Micro Devices (AMD:NYSE) Opteron microprocessors in a limited number of its computer servers.
Dell's growth has stalled recently, as the company has struggled in the face of stiff competition from the likes of Hewlett-Packard (HPQ:NYSE) , Lenovo and Acer.
The fact that Dell only sold computers featuring Intel (INTC:Nasdaq) processors was widely considered a disadvantage, given that many industry insiders believe that AMD's current line of processors are technologically superior and more power-efficient.
In the first quarter, Dell's revenue was up 6% year over year, compared with growth of 16% and 21% in its two previous first quarters.
Dell executives have insisted that they would stick with the direct-sales model that the company pioneered.
Asked whether Dell would consider selling PCs through the retail channel during a conference call with analysts last week, Chairman Michael Dell answered tersely "We're the direct company."
The retail plan has proven particularly successful for Apple Computer (AAPL:Nasdaq) , which sells its iPods and Mac computers through 136 Apple stores worldwide.
By unveiling its own stores, Dell could provide customers with a chance to touch and feel its various products and to receive answers to technical questions from a knowledgeable sales staff.
This could allow Dell to reach a broader slice of consumers and small business buyers, according to Moors & Cabot analyst Cindy Shaw.
But the approach to not actually stock merchandise could backfire if customers expect to be able to leave the store carrying a new PC, wrote Shaw in a recent note to investors.
A Dell representative was not immediately available for comment.
The fact that Dell is experimenting with retail concepts also raises questions about the company's confidence in the direct model, wrote Shaw.
"We view Dell's store pilots as either an acknowledgment that retail matters in some segments and/or a signal that management will try anything that might stimulate revenue," wrote Shaw.
Shares of Dell the regular session down 1.19%, or 29 cents, at $24.09.
posted by Jones Lang LaSalle NJ News Blog at 3:09 PM
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