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Dell nixes WebPC models
July 11, 2000: 4:20 p.m. ET

PC consumers tend to favor low prices over styling, variety of colors
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NEW YORK (CNNfn) - Dell Computer has pulled the plug on a line of compact, low-cost computers aimed at consumer Web surfers after just seven months, the company confirmed Tuesday.

The failure of Dell's stylish, low-cost, consumer-oriented desktop, called the WebPC, is part of a larger trend of consumers preferring plain beige or white machines over stylish models aimed at copying the success of Apple's iMac. In addition, the Dell WebPC was more expensive than some competing models.

Dell (DELL: Research, Estimates) introduced the WebPC late last year. graphicThe machines in the three-model line were about one-third the size of a traditional desktop tower and came in five colors. Prices for a complete WebPC system, including a monitor, printer, and one year of Internet access, started at $999.

In mid-March, Dell cut the price of its WebPC to a starting level of $699 and offered a model with a flat-panel monitor and an Intel Celeron processor for $1,599. Those enhancements were not enough, however, to save the WebPC line. Because home PC sales account for only about 15 percent of Dell's revenue, the failure of the WebPC is not expected to hurt the company's overall sales.

Failure of Presario 3500

Separately, Compaq Computer (CPQ: Research, Estimates) recently pulled the plug on its Presario 3500 in all countries except for Japan. Introduced last October, the Presario 3500 had a 15-inch flat-panel monitor, was styled in a metallic midnight blue, and occupied 60 percent less space than a traditional tower desktop. The flat panel monitor added significantly to the cost of the machine, causing it to sell for about $2,000.

"Consumers are looking at price first and then styling," said Stephen Baker, a PC analyst at PC Data in Reston, Va. "They are hesitant to buy a machine with a 15-inch flat panel screen, which costs $900 to $1,000 itself, when they can buy a 19-inch traditional CRT monitor for less than $400."

Gateway (GTW: Research, Estimates) has had a similar experience with two flat-panel monitor PCs it introduced about a year ago, although both machines are still on the market. It introduced a machine called the Profile 1.0 that has a flat panel 15-inch monitor and is built with notebook computer components mounted on the back of the monitor. Later it introduced a similar machine called the Profile 2.0 that was built with desktop components, making it cheaper than the 1.0 model.

The Profile machines have sold better in Japan, where a premium is placed on space, than anywhere else, said Gateway spokesman Greg Lund.

"They're not the main sweet spot of the market, which is the 550 Mhz to 700 Mhz desktop with a separate CRT monitor," Lund said.

The failure of the Dell WebPC could benefit Gateway's Astro, an entry-level machine Gateway introduced last November designed to do basic computing tasks and aimed at first-time buyers. The Astro has a built-in monitor, making it resemble Apple's (AAPL: Research, Estimates) successful iMac.

However, Apple's competitors have failed to duplicate the success of the iMac, which has sold about two million units since it was introduced a year ago. The iMac's simplicity and stylish colors -- including strawberry, tangerine, and lime -- made it a hit with consumers and helped revive Apple from the ashes.

"No one aside from Apple has been able to crack that styling thing," said PC Data's Baker. "There hasn't been a hue and cry for those highly styled, colored PCs." Back to top


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