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Dell notebook to woo budget buyers

The PC maker is set to launch a new sub-$1,000 consumer notebook under its SmartStep brand, aimed at first- or second-time PC buyers on a budget.

Dell Computer is muscling its way into the rough-and-tumble low-price notebook market.

The PC maker, whose previous consumer notebooks sold for around $1,200, on Monday will launch a new sub-$1,000 model under its SmartStep brand.

The non-configurable machine will be aimed at first- or second-time PC buyers looking for portability on a budget, according to Dell.

Dubbed SmartStep 100N, the $949 notebook will offer a 1.06GHz Intel Celeron processor, 128MB of RAM, a 20GB hard drive, a 14-inch display and a CD-ROM drive. The 6.8-pound SmartStep 100N aims to offer the lowest price possible and the easiest buying process, Dell said.

The new notebook is part of a plan to fill out Dell's consumer notebook line and, at the same time, woo more retail-oriented consumer buyers to the Dell brand. The SmartStep, along with another new model--the Inspiron 2600, which starts at $999--will provide Dell with an offering for every notebook niche, from low-price system to models boasting near-desktop performance. The SmartStep 100N joins Dell's $599 non-configurable SmartStep 100D desktop PC, introduced last October.

Dell's move comes at an opportune time. Notebook sales have taken off over the past year as prices have fallen. Retail sales rose nearly 8 percent in the United States in 2001, according to NPD Techworld. By contrast, desktop sales declined by 23 percent last year, the firm said.

Analysts say the proliferation of notebooks is due to lower prices, not necessarily faster processors or other features. And with the SmartStep 100N, Dell is positioning itself as the lowest-price consumer notebook maker.

"There are customers who are looking for absolute rock-bottom price," said Ketan Pandya, a product-marketing manager for Dell, in Round Rock, Texas. Those customers generally aren't as concerned with such issues as configurability or battery life, Pandya added.

Dell's previous low-price model, the Inspiron 2500, starts at $979, but quickly rises to $1,200 to $1,300 when customers begin adding features such as a larger screen.

At $949, the SmartStep 100N sells for about $50 less than competing models from Compaq Computer, Gateway and Toshiba before rebates or shipping charges.

No lack of competition
The new notebook thrusts Dell into the highly competitive retail environment, where manufacturers compete to win customers on a week-to-week basis with a mix of features and special offers.

Gateway, for example, is revamping its retail strategy. The company announced on Friday that it will begin stocking desktop PCs and eventually notebooks at many of its Country Store retail shops. Dell will sell the SmartStep 100N via its traditional direct-to-customers model and through catalogs.

Toshiba will also give Dell a run for its money. The SmartStep 100N costs less than Toshiba's $999 Satellite 1000-S158, for example, but the Satellite, which also sports a 14-inch screen and 1.06GHz Celeron processor, offers more RAM (256MB) and a DVD-ROM drive.

Toshiba ups the ante with a $100 mail-in rebate good through the end of March and free shipping for customers who buy the machine online.

Dell routinely offers rebates, free upgrades and no-cost shipping on its consumer and small-business oriented desktops and notebooks. So far, however, it hasn't disclosed any special offers for the SmartStep.

"What we want to emphasize is we're giving (buyers) all of the essential technology," Pandya said.

Analysts see the move as Dell's effort to branch into new consumer areas.

"It's not Dell's Intention to spark a new price war. I think the intention is to broaden its exposure into new consumer segments," said Alan Promisel, an analyst with IDC. "Dell hasn't been as (price) competitive lately. It is not always the leader as it has been in the past. It's still in the ballpark...but it doesn't have to make as much of an effort to wow everyone with low prices as it used to."

Dell acknowledges that the SmartStep notebook won't appeal to all customers. Some customers will want to spend more money for larger allotments of memory, a CD-RW or DVD drive, or a larger screen.

"We look at that as an opportunity for the customer to move to the (Inspiron) 2600," Pandya said.

Dell will also launch its Inspiron 2600 notebook on Monday. The fully configurable machine, priced starting at $999, is aimed at more demanding customers.

The Inspiron 2600 can be configured with a Pentium III-M chip operating at 1.2GHz, a 15-inch screen, up to a 40GB hard drive and as much as 512MB of RAM. It also offers a choice between CD-RW, DVD or a combination of CD-RW/DVD drives. A typical configuration will bring the price up to $1,300 to $1,400.

The average selling price for a notebook sold at retail in January was $1,479, said Stephen Baker, an analyst with NPD.

"You want to have price as an option in the notebook market," Baker said. "But one of the issues is, who is buying consumer notebooks? (When it comes to) people who are more likely to buy a notebook, the question is, are they more likely to buy a Celeron? Or are they more likely to go up to the average (notebook) of $1,400 to $1,500?"