January 13, 2003 6:30 AM PST

Dell seeks to cash in with retailers

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Dell Computer hopes to ring up new sales with retailers.

The company said on Monday at the National Retail Federation's Convention and Expo in New York that it would enter the market for retail point-of-sale equipment with a new line of electronic cash registers.

Dell will create its register by bundling one of its Optiplex desktop PCs with equipment such as a touch screen, bar code scanner, thermal printer and cash drawer. Prices on the cash machines will start at $1,794, the company said in a statement.

Dell views the move into retail point of sale as "an extension of what we're doing in the large corporate space," said Jon Weisblatt, a company spokesman. "We're seeing an opportunity where standards are taking hold in the point-of-sale area--checkout lanes--at retail."

It's a classic Dell maneuver. The company waits until a hardware market, like the one for PCs, becomes standardized--meaning that machines can be built with readily available, off-the-shelf components--then uses its manufacturing and procurement operation to offer products at a lower price than competitors in an effort to win market share.

The cash register is the latest in a string of products that the Austin, Texas, PC maker has introduced recently with an aim to expand the reach of its PC business. Over the last several quarters, Dell has stepped up its efforts to sell PCs and notebooks to consumers. It has also launched a "white box" PC program to reach resellers who normally wouldn't buy Dell hardware.

But the company faces stiff competition in the retail point-of-sale space from IBM and NCR, which have sold cash registers for years. Dell, the newcomer, must compete with these well-entrenched competitors not only on price, but also in areas such as integration--making its systems work effectively with existing hardware and software.

To help smooth integration with retailers' other electronic systems such inventory, Dell will work with software makers Retek, AutoGas, GERS and MSS Global. Software available from the companies, when used with Dell hardware, will automate sales transactions, inventory management, payments, accounting and other functions, the company said.

Meanwhile, point of sale may be a good point of entry for Dell, analysts say.

"The PC/register could also be an entree for Dell into the back-end infrastructure, where more lucrative servers and storage are handling supply chain and customer data," said Brooks Gray, an analyst with Technology Business Research.

One of Dell's first customers will be clothing maker Wet Seal, which will use 1,100 Dell registers in 588 stores in the United States.

While it works to expand its PC business, Dell has embarked on a broader strategy to expand its direct-sales method in other directions. It has entered several areas, including storage systems, switches, digital projectors and personal digital assistants by partnering with other hardware and software vendors. This year, it plans to enter the printer arena through a partnership with Lexmark.

Analysts say that cellular phones and digital cameras could be the next markets the company targets.

When it comes to potential markets that pique the company's interest, cell phones and digital cameras are on the top of the list, Steven Milunovich, an analyst with Merrill Lynch, said in a recent report.

"Kevin Rollins (president of Dell) didn't dismiss entering handsets, though he said Dell isn't currently interested and would likely begin by reselling someone else's phones," the report said. "The other opportunity is digital cameras, which could be of interest as price points fall and Dell moves into printers."

 

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