Dell defends decision to shift to retail
Last Updated: Wednesday, May 30, 2007 | 3:55 PM ET
CBC News
Dell Inc.'s CEO and founder, Michael Dell, defended his company's new strategy to begin selling desktop PCs in Wal-Mart stores in June, saying the departure from the direct sales model the company pioneered is part of a new effort to expand its market.
"The direct model was a real revolution in the computer industry, but it's not a religion," Dell said at a press conference in Toronto, a day before the company is expected to report its first-quarter earnings.
"We're expanding the number of places and ways people can buy our products."
It's the latest bold announcement from Dell since he returned earlier this year to the company he founded.
A week ago, the company announced it would begin selling models of its Dimension series desktops at Wal-Marts in the United States, Canada and Puerto Rico in June.
The move to retail is seen as a major departure for a company that prided itself on cutting out the middle-man and dealing directly with customers.
But it's not the first time the company has tried the approach. More than a decade ago, the computer maker briefly sold its product through retailers such as Wal-Mart's Sam's Club stores in the U.S. before abandoning the strategy and concentrating on the direct sales model it pioneered.
Now Dell thinks the time is right to give the strategy a second chance.
"One thing that's different is that Dell is about 20 times larger, so that kind of changes things a bit," the CEO said.
"I also think that price points have changed fairly dramatically so in the early 90s a computer was a couple thousand dollars and now computers are quite a bit less expensive," he said.
Dell is facing increased competition from rivals such as Hewlett Packard Co., which overtook Dell as North America's largest PC maker late last year.
Dell also faces competition from Apple Inc., which has raised the bar on personal computer design.
Its founder acknowledged that design is becoming an increasingly important differentiator as the price of computers goes down. He promised that his company would be introducing new products in the coming months that address that issue.
"[Computers] are becoming more of a personal accessory, so certainly fashion becomes more important."
