Dell Goes for the Money

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When you think of premium-priced personal computers, Motley Fool Stock Advisor pick Dell (Nasdaq: DELL) may not be the first name that springs to mind. Dell was one of the first companies to provide reasonably priced machines directly to customers, helping to spur a new phase in the computer revolution: the computer as commodity. However, today Dell announced plans for a new product line aimed at customers with more luxurious tastes.

Dell's XPS machines start at $1,100, and a quick check of Dell's website turns up an XPS laptop geared toward gamers for a whopping $4,260. Desktop models will sport Microsoft's (Nasdaq: MSFT) Media Center software and chips provided by NVIDIA (Nasdaq: NVDA) and Intel (Nasdaq: INTC), while laptops will have wireless Internet cards and NVIDIA chips.

Obviously, the XPS series is tricked out to meet the increasing demand for high-performance graphics and media on computers. Moreover, Dell's adding a dedicated service line for its high-end customers, who will wait half as long for assistance as folks who bought less expensive Dell models.

News organizations point out that Dell is going after many PC makers, including Lenovo (which bought IBM's (NYSE: IBM) PC business) and several manufacturers whose high-end computers target hardcore gamers. However, it seems to me that Apple (Nasdaq: AAPL) could be Dell's biggest target here.

After all, Apple has long had the reputation for touting computers to upscale consumers. For more than a decade, when people thought of Apple's computers, they often thought "expensive." (I know this firsthand; all my computers have come from Apple, and I paid handsomely for all of them.)

The idea of a Dell-Apple faceoff isn't outlandish, either. My fellow Fool Tim Beyers recently theorized that Apple's upcoming use of Intel chips is likely aimed more at Dell than anybody else. In January, Apple launched the Mac mini with one of the company's lowest price tags ever. And of course, Dell might feel a bit worried that Apple's current iPod craze might continue to woo more computer users to the Macintosh.

However, while Apple has always promised computer users a prestigious experience -- and a price to match -- Dell has traditionally emphasized simpler, less expensive computers. A high-end, high-priced Dell may not receive the reception from customers that Dell's hoping for.

Dude, you're getting further Foolishness:

• Has Dell upped the ante?
• Is Dell doing swell?
• What's that about an Apple vs. Dell face-off?
• Tim Beyers said in June that Apple's really out to get Dell.

Dell and NVIDIA are both Motley Fool Stock Advisor picks. To find out what other stocks have been highlighted by David and Tom Gardner, try a 30-day free trial today.

Alyce Lomax does not own shares of any of the companies mentioned.