Dell Aims High with New Dimension Computers, Shuns Budget Market

Strategic Insights -

Dell, the Texas-based personal computer manufacturer, has announced new Dimension computers that start at $1,399, using Intel's new Celeron chip. This move marks Dell's entry into the high-end market segment, while the company remains the sole major PC maker to eschew the sub-$1,000 market. Despite Intel's formal announcement of new microprocessors, the industry's anticipation for these upgrades has been modest, with the 300-megahertz and 333-megahertz Celeron chips generating more attention due to their improved performance. Analysts believe that the new Celeron chip addresses the shortcomings of the original, which led to Intel losing market share in the budget PC market.

Key Takeaways:

  • Dell has introduced new Dimension computers starting at $1,399, using Intel's new Celeron chip.
  • The company will not enter the sub-$1,000 market, remaining the sole major PC maker to avoid it.
  • The new Celeron chip has improved performance, with 128 kilobytes of L2 cache, addressing the shortcomings of the original.
  • AMD manufactures processors in Austin and California, with an estimated 54% market share in the budget-PC market in June.
  • Dell has chosen to target more sophisticated customers who purchase high-end machines, where profit margins are higher.
  • Buyers of cheaper PCs tend to be less computer savvy, requiring more assistance, which adds to costs.
  • Dell sees little demand for a budget PC and has instead focused on the higher-end market due to growth opportunities.

Statistics:

  • Dell's new Dimension computers start at $1,399.
  • The new Celeron chip has 128 kilobytes of L2 cache.
  • AMD has an estimated 54% market share in the budget-PC market in June.
  • The sub-$1,000 market accounts for an estimated 10% of PC sales.
  • Dell's profit margins are higher in the high-end market segment.

Sources:

  • "Dell Computer Corp. and Other PC Makers Announce New Systems with Intel's Latest Processors,"

Dateline: ROUND ROCK.

  • "Intel's New Processors Fuel Anticipation for PC Makers,"

IDG News Service.

  • "AMD's Austin Plant Is Shifted into Overdrive,"

Austin-American Statesman.

  • "Compaq Uncovers a New Chip,"

PCs (June 1997).