March 30, 2001 12:30 PM PST

Dell trying to woo customers with freebies

Dell Computer is using the PC industry's favorite marketing technique--freebies--in an effort to entice consumers and undercut competitors.

The PC maker is offering free MP3 players, CD-rewritable or DVD-ROM upgrades, and other goodies with a number of consumer laptops and desktops. In addition, Dell isn't charging for shipping. Some of these deals end next week, but the company has been extending the offers.

The deals come amid one of the fiercest downturns in the consumer PC industry in history. Slow demand, combined with excess inventories, has forced computer manufacturers, retailers and chipmakers to slash prices or increase rebates to goose sales.

Consumers who buy certain models of Dell's Dimension 8100 get the Dell Audio Receiver, a home MP3 player that ordinarily sells for $199.

There are deals on other PCs too. Consumer PC buyers, for a limited time, can upgrade from a CD-ROM drive to a CD-RW or DVD-ROM drive at no cost, typically a $99 value.

Small-business customers, meanwhile, get double the amount of memory free and a $100 rebate through April 5.

Round Rock, Texas-based Dell has also given away, in recent promotions, a Casio PVS 250 handheld with select Dimension desktops or Inspiron notebooks, as well as printers, scanners and digital cameras, according to ARS, a market analysis company. These deals ended Thursday.

"All promotions are well-positioned to attract PC buyers wanting to expand their digital world and save money at the same time," Toni Duboise, the ARS desktop analyst, wrote in a research note.

"The specials change pretty often," a Dell spokesman said Friday, adding that the trend of bundling free extras with PCs "is probably up more than it used to be."

Free shipping, a free year of MSN Internet service and trade-in credit on old computers are also part of Dell's current deals. In addition, the company is giving away copies of Quicken and TurboTax with PCs, the spokesman said.

Dell is not alone in offering deals. CompUSA, among other retailers, has been offering $100 rebates on all Intel-based PCs. And Duboise said other PC makers have been actively bundling as well.

Giving products away for free is a way of cutting prices without technically cutting prices, said Roger Kay, an analyst at IDC.

"When there is a lot of bundling, it is one of the signs of a fierce price war," he said.

Concurrently, many companies are cutting costs and laying off employees. One company, Micron Electronics, has even said it will exit the market by selling its PC division.

Since the end of last year, Dell has reacted to the PC sales slowdown by slashing prices in an effort to gain market share, according to analysts and Dell executives.

Typically, Dell can cut prices faster than competitors because its "build-to-order" manufacturing capabilities allow it to survive on lower inventories of components. And lower inventories mean that Dell can often take advantage of component price cuts.

The company's PC cuts, however, have moved ahead of component price reductions, analysts said.

"Dell has declared it is going to put the hurt on its competitors through pricing, but it can't be fun," Kay said.

The timing of the deals also is likely to consternate competitors. Gateway, IBM and Compaq Computer all close their financial quarters this weekend. Dell's quarter, by contrast, ends in late April.

 

Join the conversation

Add your comment

The posting of advertisements, profanity, or personal attacks is prohibited. Click here to review our Terms of Use.

What's Hot

Discussions

Shared

RSS Feeds

Add headlines from CNET News to your homepage or feedreader.