Dell to sell retail in China
Dell will begin selling its latest line of PCs and notebooks in about 50 major metropolitan Gome stores in early October and "significantly" expand its reach into the early part of next year, said the company. Gome currently has more than 700 PC-selling outlets throughout the country. Dell will also staff some of Gome's stores to help customers with purchases and "their overall experience," according to Dell. "For Dell, this is a great opportunity to extend connections with Chinese customers we may not have reached in the past," said Michael Tatelman, VP of sales for Dell's global consumer business, in a statement. Of course, retail stores were largely ignored by Dell until earlier this year, when company founder Michael Dell took back control of the company and in June began selling the company's notebooks and PCs through Wal-Mart, the world's largest retailer. Since then, Dell has announced retail deals with Carphone Warehouse in the UK and Bic Camera in Japan. Last week, Dell opened its first retail store in Russia. The moves are part of Michael Dell's larger turnaround strategy for the company, which last year lost its market-share leadership to Hewlett-Packard Co. So far, that turnaround has not been a slam dunk: in their most recent fiscal quarters, Dell's PC business grew in revenue just 3% while HP's grew 13%. HP, of course, has long sold its wares in retail stores, including big-box electronics superstores in the US such as Best Buy. In China, Dell will compete against the country's number one PC maker Lenovo Group, the company that bought IBM's struggling PC business for $1.25bn a couple of years ago, as well as HP, which is the second-largest PC maker in the country. Dell's latest move underscores the growing importance of global competition in the PC industry. Market researcher IDC forecasts that PC shipments will grow just 2.7% in the US next year, but that international shipments will rise 14.2%. US-based PC maker Gateway for years has been struggling to keep afloat and last month agreed to be bought by Taiwanese rival Acer $710m. Acer, which is currently the fourth largest PC maker, said the acquisition would push its brand beyond Taiwan and displace Lenovo in the number three market slot. Acer hopes the Gateway deal will be finalized by December. Initial Dell products that Gome will stock in China are Dell's 13.3-inch XPS M1330, XPS 720 desktop, Inspiron 1420 notebook, Dimension 9200 desktop and Inspiron 530 desktop. Our View Lenovo, which currently trails Dell in market share, is proof that a dominant presence in China does not guarantee success. Lenovo had until recently struggled to grow its brand outside China, yet remains the dominant brand in China. So Dell has some stiff competition in the country. It also is not yet clear how successful Dell's retail strategy has been. The company reports it current-quarter fiscal results on November 29.