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Dell markets cheap PC in China

WORLD OF OPPORTUNITY The company is hoping to boost sales by tempting some of the 90 percent of Chinese consumers who don't own PCs to buy a low-cost model


Dell CEO Michael Dell presents the new EC280 budget computer at a press conference in Shanghai yesterday.


Dell Inc, the second-biggest PC maker in the world, has started selling a cheap model in China to expand in a market where more than 90 percent of the population doesn't own PCs.

The computer, powered by an Intel Corp processor, was set be sold for between 2,599 yuan (US$336) and 3,999 yuan starting yesterday, Round Rock, Texas-based Dell said in a statement issued in Shanghai.

The price is 69 percent cheaper than the lowest priced model on Dell's China Web site.

Dell is seeking to bolster sales through low-cost computers in developing markets as earnings growth slowed. Founder Michael Dell returned as chief executive officer in January to help the company regain the market lead after losing it to Hewlett-Packard Co in the fourth quarter last year.

"Faster sales growth in China could really give Dell a boost because of how big the market is and how much potential it has," William Bao Bean, an analyst with Deutsche Securities Co in Hong Kong, said before the briefing. "Smaller cities and towns are really where the growth is in China because incomes are rising and people are shopping for their first computers."

He rates Lenovo Group Ltd (聯想), Dell's biggest rival in China, a "buy."

"We have a lot of opportunity" in the consumer market, Michael Dell told reporters in Shanghai yesterday.

"You'll see a lot more products" like the new PC introduced today, he said.

Dell is visiting Shanghai to introduce the new model and meet with customers.

The new computer, developed in China, consumes less electricity, takes up less work space and was made with first-time users in mind, the company said.

The company is also looking to sell the same computer in other emerging markets such as India and Brazil, said Alex Yung, Dell's China head of small business sales.

Michael Dell said yesterday the company also plans to buy companies to boost its services unit, helping to expand sales outside of its main business of selling PCs. The services business, which includes setting up computer networks and providing customer support, has annual sales of about US$6 billion.

"I'd expect to see acquisitions there," Michael Dell said.

He didn't identify countries or target companies.

About seven in 100 people own PCs in China, compared with two in 100 for India, the company said on Tuesday.

About 25 million PCs were sold in China last year, four times the 6 million in India, it said.

Dell's revenue in China rose 26 percent in the last fiscal year, it said in the release, without specifying an amount. In the fourth quarter ended Feb. 2, the Americas accounted for 61 percent of Dell's sales, down from 64 percent a year earlier.

Asia accounted for 12 percent for both periods.

Shares of Dell rose 0.3 percent to US$22.53 on the New York Stock Exchange composite trading on Tuesday. The stock has gained 5.1 percent in the past six months.

The company ousted former CEO Kevin Rollins after less than three years and reinstated founder Dell on Jan. 31, the same day it said sales and profit would miss forecasts for the fourth quarter.

Net income for the quarter ended Feb. 2 fell 37 percent to US$637 million from US$1.01 billion a year earlier, while sales declined to US$14.4 billion from US$15.2 billion, the company reported. The earnings are preliminary because of an accounting investigation.

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