Dell starts sweepstakes for PC buyers

The computer maker is trying to muscle further into the education market by giving away $50,000 a day in a sweepstakes open to new buyers of its computers.

Dude, you might be getting cash.

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With the PC industry still smarting from a brutal spring, Dell is buttressing its hopes for a back-to-school sales bump by giving away $50,000 a day all month. Those who buy a desktop or notebook from the Round Rock, Texas-based computer maker will automatically be entered in the sweepstakes.

Dell typically offers mail-in rebates, instant rebates, free printers, free shipping, free CD burners and other incentives to spur PC sales, but the company says the $1.5 million cash giveaway is a first.

"We just thought this would be a really popular way to engage with our customers at a time when there are some great values out there," Dell spokesman Bob Kaufman said.

Dell also plans other promotions this summer as well as new ads in its popular TV campaign, which feature the exuberant Steven telling consumers, "Dude, you're getting a Dell."

Analysts say Dell's promotion is another sign of tough times in the PC market.

"Obviously Dads and Grads did not come through," said Toni Duboise, who follows the desktop PC market for market researcher ARS. "They really need to motivate sales."

Although the second quarter is typically weak for PC makers, in past years there has been some pickup in late May and June as people snap up electronics for Father's Day and graduation gifts. However, Apple Computer and Palm have already warned that they saw no such pickup this year, and Hewlett-Packard has said retail inventory of its PCs has swelled.

A series of spring rebates from PC makers appears to have had little impact on overall demand.

Dell, however, has been seeing its consumer business grow this year as it has grabbed a greater share of the market. In the first quarter, Dell's consumer sales grew 26 percent compared with last year, with unit sales up 45 percent, Kuafman said.

Dell, which has passed Apple to become the sales leader in the education market, says it is growing in popularity among college students. Dell cites a new survey of college students done by Student Monitor, which found Dell to be the top brand for desktop and notebook computers.

Duboise said Dell was actually less aggressive on marketing than she expected this spring.

"They really didn't do that much," Duboise said. "I kept waiting for the other shoe to drop. There really wasn't anything that special."

Meanwhile, Merrill Lynch on Tuesday trimmed its sales forecast for Dell, saying it expects third-quarter sales of $8.5 billion, down from its prior $8.7 billion estimate. For the fourth quarter, the brokerage is now looking for $9.4 billion in sales--$600 million less than it had been projecting.

Merrill Lynch also cut its 2002 forecast for the PC industry, saying it now expects unit sales to inch up just 2.5 percent over last year, down from its earlier prediction of 10.5 percent growth.

"The back-to-school market, which usually helps the September quarter, has not materialized to a great degree the past two years and may disappoint this year once again," the brokerage said in a research note.

As for the sweepstakes, Duboise said it's unlikely to spur PC demand but could help lure those who need a PC but are also anxious about the economy.

"I think it is a rather odd promotion," Duboise said. "But if you think about it, maybe they are trying to reach out to those people who do not have consumer confidence, those lotto players."

Like most other sweepstakes, entrants aren't technically required to buy anything. Anyone can sign up by mail, no purchase required.