by CIO Staff

Dell to Announce PC Pricing Changes

Jul 11, 20062 mins
Computers and Peripherals

Dell plans to announce pricing changes to PCs for U.S. small business and home users on Thursday, in a move expected to shift the company away from promoting inexpensive, bare-bones computers for that market toward more mainstream configurations that cost more.

Dell declined to give details about which products will be affected.

“It will pertain to how we can create better value for customers who opt to buy products and services from us,” said company spokesman Venancio Figueroa III. The company will announce a “major pricing initiative” during a conference call hosted by Ro Parra, senior vice president and general manager for Dell’s home and small business group, he said.

The move is a reaction to customer complaints about prices, one analyst said.

Dell frequently offers PC sale prices as low as US$499 or $399, but those computers are low-end models that quickly grow more expensive when customers ask for faster processors or extra memory, said Nicole D’Onofrio, an analyst with Current Analysis.

“Dell’s pricing strategy has been a game of smoke and mirrors. They often showed a low entry-level price, but those systems were bare-bones PCs, not necessarily competitive to what you’d find at Best Buy or Circuit City,” she said.

Customers increasingly demand transparent pricing, D’Onofrio said. In response, many automobile manufacturers have adopted a model of selling cars at low prices with no negotiating.

Likewise, Dell competitors from Hewlett-Packard to Lenovo Group and Acer have begun to offer more static pricing, setting prices for popular configurations instead of stripped-down PCs.

The move could have a strong impact on Dell’s profits. Dell, of Round Rock, Texas, has missed its targets for recent quarterly earnings. The company is still the world’s largest PC vendor, but second-place Hewlett-Packard has been growing faster.

Ben Ames, IDG News Service (Boston Bureau)

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