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Dell unveils line of computers for `luxury' market

Dell, which has beaten its competition by slicing profit margins and turning low-price computers into a commodity, is now turning to the high end. It was to announce yesterday that it will begin selling a line of desktop and laptop computers it is calling luxury models.

While pricey laptops are nothing new, trying to sell them as a luxury product is. Dell said its new XPS brand would be sold at higher prices -- and fatter margins -- than its Dimension PCs and Inspiron laptops, starting at US$2,700 for the laptop and US$1,100 for entry-priced units of three desktop models.

Dell will sell the customized computers directly to customers over the phone or on the Internet as it does with existing lines, but it has assigned a sales force and customer service team to handle XPS customers.

The announcement of the new line was to be made yesterday by Michael Dell, the company's founder and chairman, at a location that underscores the premise -- the Ritz-Carlton Hotel in Manhattan. As the personal computer market matures, manufacturers are seeking ways to reach specialized pockets of customers willing to pay a premium.

The makers of watches or purses have long profited from dressing up their products and company image, and selling their wares as luxury goods. The strategy has been extended to utilitarian electronic products as well; the Vertu cellphone, for example, is sold through its own boutiques in Europe.

At the high end of the computer market, Lenovo, the Chinese computer maker that bought IBM's ThinkPad line, is introducing a "special edition" laptop, the Z series, with a brushed titanium case. Apple's laptops have always commanded a premium relative to comparable PCs. Alienware and VoodooPC have been aiming at gamers willing to pay top dollar for a computer that plays PC games faster than their opponents' machines.

These desktops and laptops not only have the latest components, but also have cases with glowing lights and colorful finishes that resemble those of custom-built cars. With those extras, these machines command prices of US$3,000 or more while a low-end laptop can go for US$500.

"It's an attractive place to be, but it takes a lot of effort to go after a small market," said Brian Joyce, marketing director for Alienware.

Alienware, considered the leader in the premium niche, has sales of US$170 million in contrast to Dell's US$49 billion.

Dell is making a distinction between the premium market and the luxury market, it says, much in the way that Toyota did when it created the Lexus line. Dell first tested the market early last year with machines for gamers called the Inspiron XPS. That was successful enough, the company said, that it now wants to market the brand to image-conscious customers with money to spare, the kind who would buy a Tag Heuer watch or a Dyson vacuum cleaner.

"This will be our Lexus," said Will Townsend, a Dell senior manager who gave reporters an early look at the machines.

Mike George, vice president and general manager of Dell's consumer business in the US, said: "It will appeal to the real technology enthusiast who understands what a dual-core processor is. But it will also appeal to a growing market that we see as underserved -- the technology-oriented family."

The XPS machines are designed for storing and displaying entertainment. The models have specifications like high-speed graphics-rendering cards for game-playing as well as enhancing images in high-definition television. They come with large hard drives and software for managing music, photos and video.

Dell is giving the machines a new look with materials that are supposed to scream class. For instance, the cover of the laptop is made of a magnesium alloy that gives the product a brushed gunmetal look. But Dell says the real feeling of luxury will come from the customer service. Buyers of the XPS laptops will be connected with a customer service representative within five minutes of calling, about half the time that regular Dell customers wait.
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