Dell has introduced several new high-end PCs that it plans to market as premium products backed with a higher level of customer service, company executives said at a New York press conference.
The new PCs represent an expansion of Dell's XPS brand, which in the past primarily targeted gamers. The company now wants to attract well-to-do technology users who are starting to equip their homes with wireless networks, multiple PCs, and flat-screen televisions, but who don't necessarily have the technological expertise needed to manage such a setup, said Mike George, vice president of Dell's U.S. consumer business.
Movin' On Up
Dell is wrestling with a problem that most other PC companies would love to have. As the worldwide PC market share leader, the Round Rock, Texas, company must find new sources of growth beyond its traditional business and consumer PC customers. Since PC shipment growth is expected to slow in coming years, Dell can't rely solely on its current PC customer base to meet the aggressive growth targets set by CEO Kevin Rollins.
The idea with XPS is to foster a brand that appeals to rich people. Dell's public image in the United States has long been associated with low-cost PCs, even though the company doesn't always offer the lowest prices for a given class of PCs. The new model is similar to the one Toyota Motors adopted in creating the Lexus luxury automobile brand, a Dell spokesman said earlier this year when the company first floated the idea.
The high end of the PC market is fragmented, with companies like Alienware and Polywell Computers having carved out a niche for themselves with powerful systems that feature eye-catching designs. These systems, with high-end components from Intel and nVidia, are much more profitable than the cheap PCs that got Dell into trouble last quarter. The company missed its second-quarter revenue target after failing to convince its customers to upgrade from cheap PCs to models that are more powerful and more expensive.
First-Class Service?
As part of its latest pitch, Dell will offer new services along with its three debuting XPS desktops and its one debuting XPS notebook, George said. An XPS-only customer service representative will be assigned to customers who purchase XPS systems over the phone, starting with their first call for help with the new PC. That customer service rep will maintain a relationship with the customer over the life of the product, George said.
Web customers will be able to access special support pages containing information about their products plus a chat room attended by Dell support personnel dedicated to XPS customers.
Should Dell succeed in drawing customers to its high-end products through these services, it could provide a significant boost to the company's bottom line, said Richard Doherty, principal analyst with The Envisioneering Group in Seaford, New York.
"That has the potential to be a high profit center for them, and it will be a very welcome service," Doherty said. PC retailers like Best Buy have had some initial success with services such as Geek Squad, a roving band of PC support technicians that make house calls, he said.
Power PCs, TVs
All of the new XPS PCs come with Microsoft's Windows XP Media Center Edition 2005. The XPS 400 is the entry-level machine for Dell's luxury PC customer; its price starts at $1099. The XPS 200 costs slightly more (a starting price of $1149), but it is available in a slim package that measures about 12 inches high and 4 inches wide.
The flagship XPS desktop is the XPS 600, which starts at $1849, according to information on Dell's Web site. The XPS 600's base configuration includes a single-core Pentium 4 630 processor, 1GB of RAM, a 160GB hard drive, a DVD-ROM/CD-RW drive, a 17-inch flat-panel LCD monitor, and nVidia's GeForce 6800 graphics board with 256MB of memory. Users can add a second nVidia graphics board, two more hard drives, and other high-end components.
The XPS M170 notebook starts at $2699 with a 17-inch screen, a Pentium M 760 CPU, 1GB of RAM, an 80GB hard drive, a DVD-ROM/CD-RW drive, and Intel's 802.11b/g wireless chip.
Dell has also introduced two new digital televisions: a 50-inch plasma screen and a 32-inch LCD screen. Both have built-in HDTV (high-definition television) tuners. The 50-inch TV costs $3799 and the 32-inch LCD costs $1799.
(Stacy Cowley in New York contributed to this report.)
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