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Dell to Expand Reach in California

The computer maker will open 20 retail kiosks in shopping malls to augment direct sales by Internet and phone.

June 15, 2004|Terril Yue Jones | Times Staff Writer

Expanding its reach into the California market, computer maker Dell Inc. said Monday that it would open 20 retail kiosks in shopping malls around the state.

The 10-foot-square kiosks will be set up in Los Angeles, San Francisco, San Diego and other cities starting next month to augment Dell's model of direct selling over the Internet and by telephone.

The company also said it would expand its lineup of flat-panel television sets to include plasma TVs in time for the crucial holiday shopping season. The new offerings will capitalize on the growing popularity -- and falling prices -- of big-screen TVs, said Michael Farello, vice president for marketing in Dell's consumer business.

Dell currently operates 65 kiosks in shopping malls in 10 states and one at Dallas/Fort Worth International Airport. Expanding into California is an important move, analysts say, because it will allow consumers to see and touch Dell's computers, TVs, digital music players and other gadgets instead of asking them to buy sight unseen.

"The issue that Dell has in generating growth in the consumer segment is that they need to continually get in front of the buyer," said Roger Kay, a senior hardware analyst with technology market research firm IDC in Framingham, Mass. "It is real leverage to have a real small footprint in the mall and get people to see your product."

Round Rock, Texas-based Dell usually sells its merchandise over the Internet or telephone, eliminating middleman costs and presenting fierce price competition to rivals such as Hewlett-Packard Co., Gateway Inc. and Sony Corp. Dell, the world's biggest maker of PCs, intensified that competition last year when it began selling consumer electronics devices.

Kiosks started as an experiment but have performed well for Dell, Farello said. "Customers interact with a Dell rep, there's no inventory, no build-out and no long-term leases."

Farello wouldn't say how much revenue has been generated by the kiosks, but company founder Michael Dell has called it a tiny part of Dell's annual revenue, which was $41.4 billion last fiscal year.

Dell set up such kiosks in four Sears, Roebuck & Co. stores in Texas and Florida last year but dissolved that partnership after less than three months. "We found the most effective thing for us was to have Dell direct, with no other retailer or third party involved," Farello said.

He would not give the locations of the California malls or details about the new television offerings, which will carry the Dell brand. But he said Dell decided to enter the plasma TV market after seeing some technical improvements, such as a longer overall lifespan.

Dell already sells liquid crystal TV sets under its own brand at prices ranging from $629 to $2,519, and the company said it would add new LCD models this year. It also sells four plasma TV models under the NEC/Mitsubishi, Planar and Samsung brand names for up to $5,399.

Dell shares fell 5 cents to $35.05 on Nasdaq.

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