Dell becomes one of the last major PC makers to offer a sub-$1,000 PC to consumers, although it has offered cheap PCs to business customers for some time.
PCs selling for less than $1,000 made up more than 65 percent of the retail and mail order market in January, according to market research firm PC Data. That means Dell can't be without a model in this price range and hope to significantly improve its standing in the consumer market. Dell, the largest direct PC vendor, has historically lagged its No. 2 rival in direct sales, Gateway.
Now that Dell is offering consumer systems for $999--with monitor included--company representatives say that they are really only in the mainstream of PC makers and aren't changing their strategy or compromising profits. Still, the move represents a breakthrough in terms of psychological hurdles, akin to the Dow Jones industrials moving past the elusive 10,000 mark.
Nearly two years after PC makers such as Compaq Computer opened up the sub-$1,000 market, Dell has started promoting a Dimension PC with 333-MHz Celeron processor, 32MB of memory, a 6.4GB hard disk drive, and 15-inch monitor for $999 on the front door of its Web site.
The systems will be featured in print ads, but won't be emphasized to the exclusion of the pricier systems that Dell said still makes up the bulk of its consumer sales.
"The low end of the market is significantly different from what it was 2 years ago," said Bill Robbins, a Dell spokesperson. "The entry level of the market is zero to $599 now," so Dell's entry into the consumer space with a sub-$1,000 space doesn't represent a change in strategy, he insisted.
The computer market is maturing to the point where there are three segments: $899 now buys a relatively powerful machine, $600 is about mid-range, while the low-cost leaders sell for $399. Emachines is readying a new round of sub-$600 systems to be announced in two weeks based on the Intel 400-MHz Celeron chip, for instance. (See related story.)
Robbins said Dell is still looking at ways to find profits in "all parts of the market," referring to Michael Dell's recent comments that the company was investigating whether or not the company could sell "low cost" computers profitably.