Dell Steps on Sony's Turf

Like your Dell (Nasdaq: DELL  ) PC? How about a flat-panel television to go along with it? Watch out Sony (NYSE: SNE  ) , the world's master of direct sales efficiency and low-cost manufacturing announced today that it will enter the consumer electronics field with products available in time for the Christmas season.

Announcing his company's new direction, Michael Dell said, "By introducing high-performing consumer electronics products that closely integrate with the computer, we are delivering what is most important to consumers -- content and experience -- at a better value than they're currently getting."

Some will say Dell's entrée into consumer electronics is a sign that its core PC business is softening. Maybe so, but it's also a natural growth avenue given trends in home networking. As home networking grows in popularity, the PC is becoming an important part of the home entertainment system -- and vice versa. As this trend prospers, Dell may well be able to grow its brand beyond the office and into the living room.

Dell's move follows similar success from Gateway (NYSE: GTW  ) who last November launched a 42-inch plasma television that is reportedly the best-selling product in its category. That said, unlike Gateway, Dell doesn't have retail stores to show off the clarity of its televisions. Consumers may be reluctant to commit to a major TV purchase without an up-close inspection.

In addition to televisions, Dell's initial slate of consumer electronics will also include a digital music player, an online music service, a home entertainment projector, and a wireless handheld. If these products feature the great quality and value Dell is known for, there seems no reason Dell shouldn't be able to carve out a nice new niche of growth with this push.


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