Dell move into printers and PDAs benefits users

Dell's eventual entry into the printer and personal digital assistant markets will cause headaches for some vendors and delight users as the company drives down prices, analysts say.

          Dell's eventual entry into the printer and personal digital assistant (PDA) markets will cause headaches for some vendors and delight users as the company drives down prices, analysts say.

          Dell chairman and CEO Michael Dell confirmed the company will sell printers and PDAs during a Tpress conference last week announcing the company's earnings. He would not specify when printers and PDAs will be sold, but says the company views both areas as "attractive markets."

          Hewlett-Packard (HP) is the acknowledged leader in the enterprise printer business, where Dell will initially look to compete with large laser printers, says Steve Baker, director of research at NPD Techworld.

          "High-end printers are a high price-point, low-volume market, and Dell's opportunities will be much better there in the short run," he says. Dell's traditional strength has always been in the business markets, and only recently have its products grown among consumers, he says.

          HP will be forced to examine its business model, and see if it can find a way to more aggressively price its products, Baker says.

          Dell's ability to deftly manage its manufacturing and distribution activities will serve it well in the printer business, says Rob Enderle, research fellow at Giga Information Group. Due to the strength of the enterprise printer players, however, Dell will probably look at first to partner with a more established company, like Lexmark International or Xerox, he says.

          While the printer market may seem like a more natural complement to Dell's PC and server businesses, both analysts agreed that the enterprise handheld market has more potential in the long term.

          "The adoption of PDAs and wireless connectivity is pretty low right now, so there's a lot of opportunity in vertical markets," Baker says. Consumer PDA leaders Palm and Handspring haven't spent as much time developing the enterprise handheld market, he says.

          "Handhelds are more simple and Dell-like," Enderle says. The margins on printers are extremely low, with many machines sold at near cost, and companies looking to make their money on ink cartridge sales, he says.

          Dell, based in Round Rock, Texas, will attempt to get products out in the fourth quarter, Enderle says. Initially, the company will compete mainly on price, but will look to incorporate new features and options into the second generation of its products, he says.

          "Dell has proven they can bring out quality products at lower prices. Businesses are looking for value above all else right now, and if (the products) are good enough, they'll do OK," Enderle says.

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