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Dell launches prefab PC for $599

The company announces a low-cost, prebuilt PC in hopes of enticing computer buyers who traditionally have opted to make their purchases at retail stores.

Dell Computer is launching a prebuilt PC for $599 in hopes of nabbing computer buyers who traditionally opt to shop at retail stores.

Dell, which sells computers directly to consumers and is known for its build-to-order strategy, announced the SmartStep 100D on Monday. As earlier reported by CNET, the company started selling the 1GHz machine from its Web site on Friday.

"This is really an opportunity...for people who've wanted to own a Dell to get in and try out a system that is preconfigured for them," Dell spokesman Bob Kaufman said Friday. "There are many people who may not feel as comfortable building their own systems."

The SmartStep features a 1GHz Intel Celeron chip, a 20GB hard drive, 128MB of synchronous DRAM, a CD-ROM drive, a 15-inch monitor, the Home edition of Microsoft's Windows XP operating system and six months of America Online service. Buyers who want options such as a CD burner or larger monitor are prompted to consider the Dimension 2100, which is Dell's least expensive build-to-order machine.

The Round Rock, Texas-based company is not manufacturing the SmartStep itself. Instead, Dell is contracting production to Taiwan's Mitec.

Gartner analyst Mark Margevicius says Dell Computer's low-cost, fixed-feature-set PC is well-timed to take at least a small bite out of the retail PC market.

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Dell was the only major PC maker to increase sales in the third quarter compared with last year. The company grabbed 25 percent of U.S. shipments in the third quarter--double that of its nearest rival.

David Bailey, an analyst at Gerard Klauer Mattison, said Dell is seizing on the uncertainty created by Gateway's restructuring and by the pending merger of Compaq Computer and Hewlett-Packard.

"It's also priced extremely aggressively, which takes into account the current economic conditions," Bailey said. "We would expect Dell to be extremely aggressive during the holiday shopping season."