September 23, 2003 11:52 AM PDT

Dell to name its own tunes

Dell is about to crank up the jukebox.

The PC maker is preparing to unveil a new consumer-electronics plan under which it will sell two types of devices--a portable music player and a line of LCD TVs--under its brand name for the holidays.

Outside of computers, Dell has put its name on only a limited number of product categories, such as printers, network switches, projectors and USB storage devices. But Dell, which uses its online store to sell a large quantity of consumer-electronics products from other companies, asserts that offering such devices under its own name can help it meet revenue goals.

Round Rock, Texas-based Dell is expected to discuss its latest consumer-electronics plans Thursday during a press conference, where it will also outline an upgrade to its online store and touch on new Axim handhelds.

One of its first new consumer-electronics devices will be a hard drive-based portable MP3 player, sources familiar with Dell's plans said. The player, which is expected to include a 15GB drive, will compete with others in the market, most notably Apple Computer's iPod. Dell sells the iPod via its online store and is expected to continue doing so after the debut of Dell's own player.

The company's LCD TVs are likely to include a 17-inch model and a 30-inch model. Dell is also expected to continue selling LCD TVs from other companies.

Dell's new products are expected to ship in October or early November.

The company is not likely to unveil many other details about the devices--or of any other new products it intends to offer--during the press conference.

However, Dell is expected to reveal that it is working on two new Axim handhelds. Dell's new Axims are likely to include a slimmer model, dubbed the Axim X3, and a new wireless model.

Dell representatives declined to comment on the new products. But senior executives, including CEO Michael Dell and President Kevin Rollins, have indicated the company's interest in music players, wireless handhelds and LCD TVs several times in the past.

Expanding its sales of consumer electronics is one area the company can tap to further its goal of boosting revenue to the $60 billion mark over the next few years.

Although Dell will seek to mine the consumer-electronics market, it's unlikely that the company's efforts will be as broad as competitors such as Gateway, which plans 50 new products this year--most of them consumer-electronics devices.

But analyst say that doesn't necessarily put Dell at a disadvantage. Where Gateway has introduced several new Plasma TVs, LCD TVs and even a music player this fall, Dell is eyeing areas such as TVs as a new profit pool that could augment its already substantial revenue and boost profits with little risk to the rest of its business.

In addition to selling its new products as standalones, Dell will likely bundle them with its PCs. Dell offered a number of special consumer-electronics bundles, which included its printers and Axim handheld, for the back-to-school season and is expected to offer more for the holiday season.

"This is not only a consumer story for Dell," said Brooks Gray, analyst with Technology Business Research. "When it comes to products like televisions even large corporations and small and medium businesses are also recognizing the allure of flat, LCD televisions in the office. They'll be positioned in conference rooms and reception areas, among others. I believe Dell will capitalize on the increasing demand for (TVs) over the next two to three years."

Today the TV market is worth about $20 billion in revenue per year, Gray said. While LCD and Plasma TVs are still in their infancy, Dell could potentially add a billion or more in revenue just from TV sales, if it successfully captures a large enough portion of the market over as little as the next three years, he said.

Because Dell will contract with outside manufacturers to produce the TVs and other devices, it faces little risk. Dell can arrange to terminate contracts of products whose expected sales do not materialize, Gray said.

Meanwhile, Dell is working on a related PC. Dell plans to offer a Media Center PC based on Microsoft's Windows XP Media Center Edition 2004 software. The software, code-named Harmony, is set to come out on Sept. 30, CNET's News.com has reported.

CNET News.com's Ina Fried contributed to this report.

 

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