Michael Dell last year promised innovative new consumer products to generate "product lust" and spark his company's turnaround effort. But in the runup to the holiday sales season, Dell Inc. has been slow to deliver on that promise.Dell has decided not to launch an ambitious new dell laptop it hoped to release before the holidays -- a digital music player tied to online entertainment software -- says a person familiar with the matter.
The company also has lagged rivals this holiday season in releasing new notebook personal computers, which make up the biggest segment of the consumer market. Since September, Hewlett-Packard Co.'s releases have included a pair of entertainment-focused HP laptops, an inexpensive mini-notebook -- called a netbook -- and a notebook designed specifically for Best Buy Co. stores. Apple Inc. released apple Macbooks made of aluminum, and Acer Inc. released a host of new acer notebooks and acer laptops, including some with leather trim and others with access to fast 4G networks.
Dell so far has limited its preholiday consumer notebook releases to two netbooks. "We intend to launch another half-dozen laptops and desktops between now and the end of the calendar year," a spokesman said in an email. On Tuesday, Dell plans to announce new paint designs for some existing notebooks that are sold on its Web site.
"Most any math you could do would say that they're late," says Roger Kay, a PC industry analyst with Endpoint Technologies. He says Dell's consumer division has moved slowly this fall. "It really does feel like there's a lack of momentum," he says.
Dell earlier this year was testing prototypes of a mini MP3 player based on entertainment software from Zing, a company Dell bought in 2007, for an expected fall release, say people familiar with the matter.
But Dell postponed Zing's release as it finalized the system, those people say. Dell finally decided to hold off on the music player indefinitely, one person said, and to proceed with Zing software. Dell declined to comment on the music player, but said it will introduce Zing software that organizes downloaded music and movies on PCs.
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Dell says it is well-equipped for holiday sales, having unveiled multicolored Studio notebooks in June and several desktops since. Dell also released a large version of its high-end, all-in-one desktop this fall, along with other desktop models.
Dell says fall sales have been solid, pointing to data from the research firm NPD that show three Dell laptops among the 10 best retail sellers for the third week of October. Dell also says it has released as many consumer products this year as competitors, in some cases more -- giving it one of the industry's biggest notebook selections.
But the relative dearth so far of new products pegged to the holidays could be a disadvantage in the end-of-year season, which started last month and typically generates 30% to 50% of annual consumer PC revenue. Lou Miscioscia, a Cowen & Co. analyst, says it has also raised concerns about Dell laptops attempt to emerge from a three-year slump.
"They're obviously behind on the consumer side," Mr. Miscioscia says. Last month, he lowered his expectations for Dell laptop sales over the next year, citing economic weakness and a "slower-than-expected ramp of new PCs."
Mr. Dell declined to comment, but the company's retail chief Michael Tatelman says the product cycle is robust. "You'll see some very sexy products coming out of Dell," though they may come after the holidays, he says. Dell, he adds, will fuel holiday sales with new ways for consumers to personalize PCs, such as new exterior designs and deals with music and movie providers to preload entertainment content on PCs.
Dell was historically known for selling high volumes of business PCs. Mr. Dell focused on streamlining PC assembly, rather than dictating product design like Apple CEO Steve Jobs.
But since returning as the Round Rock, Texas, company's CEO last year, Mr. Dell has emphasized design. In a conference call last fall, he said Dell would increase consumer sales by engendering "product lust." Dell said it would "focus on 'killer' products, next-generation materials," and a "shorter development cycle" to get products out "40% to 50% faster."
Dell's consumer sales still lag rivals'. The company had 9.2% of global consumer PC sales in mid-2008, versus 18.7% for H-P and 12.3% for Acer, according to research firm Gartner. Dell increased its consumer sales in its last reported quarter, but the consumer division failed to make profit.
In October, Dell finished company-wide layoffs of about 9,000 workers.
While Dell has increased the frequency of product releases since Mr. Dell's return, it also has run into delays. Some devices have taken longer than expected as Dell worked on design specifications and shifted production to contract manufacturers, say people briefed on the matter.
Dell's first dell netbook was planned for early summer, a Dell executive said. But it was postponed because of delays related to its keyboard design, the company said. It made its debut in September, missing most of the back-to-school selling season.
Jason Bonfig, Best Buy's vice president of notebook computing, says he is happy with Dell's holiday offerings, which include a $1,700 gaming desktop exclusive to Best Buy announced last month.
He says there are advantages in focusing fall sales on Dell's established Studio and high-end XPS notebooks, rather than depending on new notebooks for the holidays. Stocking stores with established models, "takes some of the risk out of it," Mr. Bonfig says. "And you don't get into a situation where you can't deliver."
