Dell set to launch ISP, e-commerce portal

Called DellZone, the new site will be a "place for special offers with top-tier brands, exclusively for Dell customers," according to a message on the site. The site also lists e-commerce partners Amazon, EToys, The Wall Street Journal, WebMD, DrKoop.com, Virtual Vineyards, and Snap.com. (Snap.com is a joint venture between NBC and CNET, publisher of News.com.)

Each of these e-commerce partners will offer discounts to Dell customers, while Snap.com will provide search, email, and content. Dell previously had been associated with Excite in its DirectConnect initiative.

With DellNet, the PC maker will join the trend of marketing its own branded Internet service to customers in conjunction with a bandwidth provider, similar to plans other PC makers have made. Gateway's Gateway.net is one of the more high-profile of these deals.

Paul Bell, senior vice president of Dell's home and small business groups, and Janet Mountain, general manager of Dell's consumer division, will announce a consumer Internet initiative, according to a company statement, during a conference call at 8 a.m. PT tomorrow. The two are expected to announce DellNet and DellZone, sources say.

Dell, which sells computers directly to consumers and businesses through the Internet and by phone, has been making significant moves to refocus its business onto the Internet. Earlier this year, the company launched GigaBuys.com, an online store for computer peripherals and software, and this month launched its auction site for refurbished PCs and peripherals.

Although the company declined to comment on specific plans, certain elements to the strategy can already be partially viewed online. DellNet appears to bring together disparate elements including search functions and content from Snap.com and Web-based free email from Mail.com.

In the face of razor-thin profit margins from hardware sales, all PC makers are reconfiguring their strategies to include partnerships with ISPs, rebate programs, and other revenue streams which will offset losses from their traditional business.

Dell is far from the first PC maker to expand into Internet services. Rival Gateway has found success with its Internet strategy, which includes its SpotShop online store and Gateway.net. Gateway's non-PC revenues now account for 10 percent of all income, the company said last week in its earnings statement.

Dell, like Gateway, is well-suited to offer all types of Internet services to consumers, said Carl Everett, senior vice president of personal systems at Dell in an interview last month, because of its direct sales and configure-to-order model.

Long expected to launch an Internet service in the United States to match its European service, Dell executives have said in the past that they do not need to acquire an ISP to provide Internet service to their customers. The company is expected to rely upon a similar partnership such as the one rival direct seller Gateway has struck with UUNet to provide its Gateway.net service.

News.com's Michael Kanellos and Jeff Pelline contributed to this report.