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Dell sets its sights lower, much lower, with the launch today of its first near-$1000 notebook, the Inspiron 2500.

With a starting price of $1049, the 2500 is the company's first foray into the true low-end notebook market. Available now, the entry-level system ships with a 700-MHz Intel Celeron processor, 64MB of memory, a 5GB hard drive, a 24X CD-ROM drive, Windows Me, and an active-matrix 12.1-inch display.

Until now, Dell had resisted entering the $1000-notebook segment. While companies such as Compaq, WinBook, and E-Machines have offered notebooks at that price, Dell has long insisted it could not put together a new, no-compromises product and still make money.

Prior to the 2500 launch, Dell's least-expensive notebook sold for about $1299, according to a spokesperson. (The company does sell some end-of-run notebooks for lower prices.)

LCD Is Key

Dell executives have maintained they wouldn't offer a low-end notebook with a passive-matrix display, preferring to stay out of the market instead. Passive matrix displays are less eye-friendly than the more expensive active-matrix screens.

"Even a year ago, Dell would say a $1000 box is insane," says Tim Boyd, Dell's technical and performance marketing manager for Inspiron. There simply wasn't a way to sell a notebook for close to a grand without sacrificing usability and still make money, he says.

A key to launching the 2500 priced at $1049 is the capability to secure active-matrix LCDs at low enough costs to make the product viable, Boyd says. Dell formed key alliances with display manufacturers to bring those prices down, he says.

While the entry-level 2500 uses a smallish 12.1-inch display, using Dell's build-to-order model, customers can also configure 2500 systems with a 14.1- or a 15-inch display. A unit with a 14.1-inch display and the same hardware detailed above sells for $1199; the 15-inch-display model sells for $1449. Other upgrades such as larger hard drives, CD-RW drives, and Zip drives are also available.

The battery is another area where many vendors traditionally save some money in their value-priced notebooks, sometimes by using older and less effective technologies. Dell includes a lithium ion battery with the 2500, the best mainstream battery technology in use.

Some Compromises

Of course, you can't expect to buy a notebook for $1049 and get all the latest and greatest technologies. Obviously, faster CPUs and bigger hard drives are out there, Boyd says.

Also, the 2500 lacks amenities such as its own model-specific docking station, which is important to some--mostly corporate--users. However, you can use a generic USB-based dock, he says.

Dell isn't targeting the Inspiron 2500 at business buyers, although a certain number of small business users will be attracted to the price, Boyd says.

Dell designed the product to appeal to "the consumers (to whom) price point is king," he says. The company expects most of the people to buy the product to be first-time portable buyers and people looking for a second PC or notebook.

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