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Dell partners with S3 on MP3 players

The company will jump into the consumer electronics market this week when it unveils an MP3 home stereo component that will be co-marketed with digital music specialist S3.

Dell Computer will jump into the consumer electronics market this week when it unveils an MP3 home stereo component that will be co-marketed with digital music specialist S3.

Called the Dell Digital Audio Receiver, the appliance will allow consumers to play MP3 files at home. Consumers will download music from the Internet with their PC, and the PC will feed the files to the MP3 player, which will then transmit the files to speakers or a standard stereo receiver for playback.

The underlying technology for the receiver comes from S3, said Mike Reed, S3 vice president of marketing. Dell designed the outside of the box. Both brand names will appear on the unit.

The product will go on sale in August but will be shown at PC Expo next week in New York, Reed said.

Dell, ordinarily one of the more conservative PC manufacturers, has been gradually moving into the market for Internet appliances and consumer electronics. Last year, it began selling interactive pagers from Research in Motion. To date, Dell does not market its own handheld computers, although it sells Palm handhelds on its Web site.

The MP3 player will be the first appliance-like product to carry the Dell brand name. Earlier this month, Compaq Computer CEO Michael Capellas said that his company would also begin selling MP3 players.

Though it's a departure for the company, music players will also promote Dell's vision of wired homes centered around the PC, executives said.

"One of the primary usage models of the Internet overall is really music, and music has been climbing up the charts pretty dramatically," said Greg Nakagawa, Dell's director of consumer Internet products and services. "In one survey we conducted, it is the fourth most general usage model behind general Web surfing, email, news and weather."

Dell's larger objective is "creating a larger digital music portal play," Nakagawa said. "We'll add value to the user in terms of local music content, alliances with other vendors, etc. It's really the tip of the iceberg you're seeing."

Dell's actions will also be a boon for S3. Once a graphics giant, the company has undergone a complete transformation to become a consumer electronics company. Last year, S3 got into the digital music player business when it bought Diamond Multimedia.

Since then, the company has been signing affiliate deals under which larger companies re-brand and market their products. Athletic goods manufacturer Nike, for instance, will market S3 music players.

Dell's receiver will cost $199 if bought with a PC configured with home networking capabilities and $249 if bought separately.