Dell: From Yawn to Yipes!

The new XPS line is sleek, sexy eye candy. So is Dell getting cool?

Dell Inc. (DELL ), king of the bland box, has suddenly discovered design. Check out its new XPS M2010, a cross between a desktop and laptop targeted to entertainment enthusiasts. The $3,500 machine, which features a detachable wireless keyboard and monitor with adjustable height, has a matte-black leather-like exterior, making it resemble a luxury briefcase when closed. Meanwhile, Dell's new $1,990 XPS 700 desktop, aimed at hard-core video gamers, has side lights meant to add flash and grilles resembling those of a fancy sports car.

The Round Rock (Tex.) PC maker hopes a few of these design flourishes can help pull it out of a low-margin hole. Long the most efficient PC maker, Dell has suffered lately as rivals such as Hewlett-Packard Co. (HPQ ) match or even undercut its prices. Now Dell is trying to turn a few heads and sell some higher-priced machines by experimenting in the opposite direction.

The company has beefed up its internal team of industrial designers, recruiting from auto makers, consumer products marketers -- even a German watchmaker. It has expanded links to outside design firms. And two months ago Dell bought Alienware Corp. (DELL ), whose sleek machines, modeled after the beast from the movie Alien, are legendary among gamers.

Just don't expect to see many signs of this design renaissance on your workaday desktop any time soon. Most of the attention so far is focused on the newest XPS PCs, which are aimed at ultra-narrow audiences. The entire line represents only about 1% of Dell's total 2005 sales of $55.9 billion, estimates Majestic Research Corp. Focusing on those machines makes sense, given the coolness imperative of the gamer community and its willingness to pay more for hot-rod PCs. "If you want to go into the gaming space, you can't take a standard rectilinear, bland-colored box," says Dell Senior Vice-President John K. Medica, who oversees the design efforts.

Most outsiders are skeptical, moreover, that Dell will pay more to jazz up its mass-market machines. Dell's whole business model is based on squeezing every nickel of cost, and it already plans to spend a hefty $100 million this year to improve customer service. "Whether Dell can improve its overall designs depends on how radically it can adjust its culture," says Bob Djurdjevic, president of tech consultancy Annex Research Inc.

Dell acknowledges that it is not overhauling the looks of its mainstream PCs. Insiders say that while the aim is to make the XPS line seem "sophisticated" and "unexpected," Dell's other machines should be "approachable," "innovative," and "fresh." Thus, familiar lines like the Dimension desktops are destined to remain looking relatively ho-hum, albeit with some changes such as altering the finish to make them look sleeker.


Medica hopes the gamer PCs will generate good feelings that spill over to Dell's other lines. That clearly works for some consumer goods makers, as seen with DaimlerChrysler's (DCX ) expressive 300 sedan and Target Corp.'s (TGT ) "cheap chic" housewares.

Yet, does the average user really care about cool looks? Few have tried to find out. In 2003, boutique brand Acer Inc. (ACER ) introduced its "Ferrari" laptops, bright red machines sporting the race car line's prancing-horse emblem. They have a limited audience, but do produce chatter around the Acer name, analysts say.

In fact, most of Dell's effort on its mass-market PCs is to make them easier and more comfortable to use. No detail has been spared. Starting in late 2004, Dell set out to revamp the controls for laptop touchpads. "The buttons were noisy and didn't feel nice," says Dell senior manager Keith Kozak, who oversaw the project. Scores of customers were recruited, at $75 each per session, to detail how much noise was tolerable and what buttons were most comfortable.

Within months, Dell produced a keyboard with new touchpad buttons. Dell proclaims them a success: The buttons now produce 41 decibels, vs. about 51 before. And they drop 1.3 to 1.6 millimeters before bouncing back, vs. 0.5 previously.

Take that, HP.

By Louise Lee

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