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Commentary: SmartStep takes a small step

With the holidays around the corner, 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.

By Mark Margevicius, Gartner analyst

With the holiday season just around the corner, 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 and the majority share owned by Hewlett-Packard and Compaq Computer.

See news story:
Dell launches prefab PC for $599
At $599, the price of the SmartStep 100D is right for consumers, and Gartner believes that Dell will achieve a moderate level of success and incremental revenue--without any great effort--thanks to the PC's affordability alone.

The SmartStep comes with a CD-ROM drive, a floppy drive, an integrated video and sound card, PC speakers, and six months of AOL Internet service. Its configuration offers acceptable levels of storage, processing and memory. However, consumers wanting to upgrade or change their configuration in any way should buy a different system, because with SmartStep's nice price comes a somewhat rigid packaged deal.

The PC's service warranty offers a bit of flexibility, because the buyer can choose a 90-day warranty or a one-year contract--the latter costs an additional $50 for the extra nine months. Loyal Dell customers who feel they will want to upgrade this warranty should buy the Dell Dimension, whose service warranty offers greater flexibility. For either option, the customer cannot upgrade the system without voiding the warranty.

Gartner believes that businesses will get some exposure to the SmartStep when individuals bring in the circular ads to their IT shops and say, "How come we're not buying these PCs at this price?" Businesses should remember that the SmartStep is an appliancelike device that cannot be upgraded to meet many recommended business requirements. Some of those limitations include the following:

• An Intel Celeron processor (Gartner recommends the Pentium 4 for business use)
• 128MB of RAM (Gartner recommends 256MB)
• The Home Edition of theWindows XP operating system, without the option of Windows XP Professional
• Limited warranty
• SmartStep's consumer focus

In Gartner's opinion, Dell's SmartStep is best suited for first-time computer buyers who have a limited budget, as a gift to a new PC user or as an inexpensive second system for experienced users. Otherwise, experienced PC users are better served by systems that offer greater performance, configuration flexibility and upgradability, and more warranty options.

(For a related commentary on Windows XP and PC sales, see Gartner.com.)

Entire contents, Copyright ? 2001 Gartner, Inc. All rights reserved. The information contained herein represents Gartner's initial commentary and analysis and has been obtained from sources believed to be reliable. Positions taken are subject to change as more information becomes available and further analysis is undertaken. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of the information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.