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Thinking Small At Dell

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Nine months after it pulled its flawed notebook personal computer off the market and trashed ill-conceived blueprints for models still in the lab, Dell Computer Corp. is set to announce a return to this booming market. But don't look for a grand reentry.

The machine Dell will unveil shortly is simply a stopgap product purchased from rival AST Research Inc. Dell's goal: to reestablish a presence in the notebook market while its designers struggle to complete their own product. "When you have to jump on a treadmill going 180 mph, you get someone to lend a hand," concedes Dell CEO Michael

S. Dell.

R&D FRENZY. Dell's move may make a bad situation bearable. Reselling the AST machines can't offset the $38 million loss that analysts predict Dell will report in March. But Dell can't afford to ignore a market that should grow by 17% this year, says market researcher International Data Corp. Indeed, analysts say less than 3% of Dell's fiscal 1994 sales are from notebook computers, compared with 20% at rivals such as AST and IBM. Meanwhile, Dell is spending time in the lab with manufacturing partners--including Sony Corp., say former managers--to develop a full line of mobile computers.

Some critics say that Dell's recovery plans are already slipping. Its own notebook won't be ready until summer, says former Dell manager John Biebelhausen, who now works at IBM's Ambra Computer Corp. subsidiary. That's too slow for an industry where products live for only five to seven months.

Dell executives, who declined to discuss the product, warn against judging its notebook plans based on its AST machines. "It took us a while to screw this up, and it will take a while to fix it," says Michael Dell. The question is, can he do so quickly enough to regain lost ground?Peter Burrows in Dallas

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