Dell lays plans for life beyond the desktop

Michael Dell is adamant that the PC market has a bright future. But unobtrusively, Dell Computer is laying the groundwork for new ventures that will take the $US20 billion company beyond the desktop.

Four months ago, Dell quietly consolidated its engineering efforts in the OptiPlex and Dimension PC areas to look at technologies that are driving the industry. The company's peripheral, platform and software groups are looking into storage, LCDs, chip sets and graphics, according to Dell spokesman John Thompson.

"You can start thinking about form and function areas" now that base performances of PCs are solid, Thompson said. For example, all-in-one PCs, one of Dell's new development areas, will combine large LCD displays with a lightweight computer.

On other fronts, CEO Dell last month said his company will start its own Internet service provider in the US but provided few details. The company also said it's getting into the online auction business. And in the next few months, Dell plans to unveil new electronic services, according to Thompson.

Perceived Wisdom

Some industry observers said Dell is wisely responding to shrinking profit margins throughout the industry and predictions of slowing PC sales.

The $US170 billion PC industry "is doing well, but it's a cyclical business. At some point it will slow," said Wendy Abramowitz, an analyst at Argus Research in the US. Dell is already seeing its stock price slump -- to $US37 per share on June 30, down 33 percent from its $US55 high in February.

Other industry watchers said the US-based company's phenomenal growth rate won't subside any time soon.

"There's a lot of PC growth left. The new devices will tend to be ‘in-additions-to' as opposed to ‘instead-of PCs'," said Roger Kay, an analyst at International Data Corp. (IDC) in Framingham.

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Stacy Collett

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