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Dell, following Gateway, will launch own ISP

Dell Computer will begin offering Internet service in the United States within the next three months, chief executive Michael Dell confirms.

NEW YORK--Dell Computer will begin offering Internet service in the United States within the next three months, chief executive Michael Dell confirmed.

Dell's move to include Internet CNET's PC Expo coverage service among its offerings marks the PC maker's continuing evolution from purely a PC manufacturer to service provider, and reflects an overall industry sea change. As hardware prices continue to free fall, PC manufacturers have turned, with varying degrees of success, to offset these diminished profit margins with new Internet-focused revenue streams.

PC makers have another vested interest in getting into this market: Consumers today judge a computer system on its speed and ease of Internet access just as much as they do its hardware specifications, Dell said in an interview with CNET News.com at PC Expo here. He sees PC companies shifting even more of their focus on Internet connectivity in the future.

Gateway, for instance, has launched the Gateway.net Internet service, along with an online store similar to Dell's Gigabuys.com. Gateway is also rumored to be expanding its Internet presence by acquiring Internet service provider EarthLink.

Because of the overwhelming popularity of the Net among consumers, Dell has already begun offering high-speed network and cable modem cards as an option in its PCs. The company further offers ConnectDirect, a personalized Internet-centric feature developed in partnership with Web portal Excite. A Dell-branded ISP would likely be an extension of these offerings, a spokesman said.

Dell's move into the Internet access space comes as the company continues to reinvent itself. As first reported by News.com, Dell will launch an online auction site next month. (See related story.) This week, Michael Dell confirmed these plans, adding that it will feature third-party computers.

Dell is in a unique position to offer all types of Internet services, said Carl Everett, senior vice president of personal systems at Dell, because of its direct sales and configure-to-order model.

An acquisition of an ISP is not likely, Dell said. Instead, the company would be more interested in partnering with local telephone companies.

At a separate PC-Expo-related event, he said that this service will likely be rolled out in the U.S. within the next 60-90 days.

Dell already offers similar Internet services in the United Kingdom, France, and Germany, with one big difference: The access is free. (See related story.)

In Britain, for instance, Dell has partnered with British Telecom, a spokesman said, explaining that an American venture would have to be structured differently, because of differences in call billing.

In its 17 year history, Dell has not yet acquired a company, the spokesman said, calling the chances of such a plan, "possible, but not probable."

"Watch this space," Dell said.