Hand it to Dell, probably the worst run of the large global PC companies to have bad timing.
It is launching a new line of expensive, high performance laptops. The new products will be called Adamo and will cost about $2,000. In a recession, consumers are likely to grab them off the shelves so fast the Dell will be out of inventory in a week. (See pictures of vintage computers.)
The program shows how out of touch with consumer trends Dell has become. According to the AP, "The leap Dell is asking consumers to make from its core brand would be a risk in any economy, let alone the worst recession of the personal-computer age." The news service has gone beyond stating the obvious.
What Dell really risks is playing the fool in front of its investors again. The company was late getting into the retail business and away from the model of selling all of its machines via the internet or phone. As rivals like Hewlett-Packard (HPQ) have moved further into the software and services businesses, Dell has been flat-footed. Dell plans to get into the handset business, which is already crowded with cut-throat competition from RIM (RIMM), Apple (AAPL), Nokia (NOK), and Samsung.
Dell's shares trade below $9, down from a 52-week high of over $26. If its next quarterly earnings are weak, investors will almost certainly knock the shares down again. That will leave fewer people to buy the new $2,000 PCs.
Douglas A. McIntyre
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