Dell: Color It Competitive?

Its new product launch is intended to revitalize the brand with sleek styling, up-to-the-nanosecond features, and a rich palette of colors

by Louise Lee

Will computers in ruby red and flamingo pink lend some badly needed zing to Dell, the king of the bland box?

On June 26, Dell is unveiling a line of personal computers it hopes will mark the first step in revitalizing its struggling consumer business. To promote the notion that a rainbow of colors will make its PC's hip, Dell is launching the new line at an icon of mainstream fashion: Macy's department store in Manhattan's Herald Square.

But it may be a little late for Dell (DELL) to distinguish itself from the pack in terms of looks. The move from dull grays and blacks comes years after Apple charted a colorful new course in computer design, prompting many of Dell's Windows-based rivals to follow suit.

Broadening the Appeal

Overshadowed by rivals, including Hewlett-Packard (HPQ), Dell has floundered in the consumer market in recent years. Firing up the brand will be an uphill battle (see BusinessWeek.com, 6/1/07, "Dell's Road to Recovery"). According to an annual survey by BusinessWeek and the marketing consultancy Interbrand, Dell's "brand value" in terms of earnings power, market leadership, and global reach declined in 2006. Other than its high-end XPS line, "none of Dell's consumer brands have cachet or stand for much," says Michael Megalli, a partner at marketing consultancy 1066. Reviving the brand is "not necessarily about being cool; it's about being appealing to a lot of people," he adds.

Dell's consumer sales, generated almost entirely within the U.S., account for about 15% of the company's total annual revenue of about $57 billion. As part of the push to expand consumer sales, Dell also has decided to downplay its venerable Dimension brand for desktop machines so it can market a single identity to consumers: The new desktops and laptops will both be sold under the Inspiron name, which had previously been reserved for laptops.

Expert Help

The product launch follows a sweeping corporate overhaul in which Dell carved its consumer business into a separate unit and hired as its chief Ron Garriques, the Motorola executive who presided over the RAZR cell phone's huge success (see BusinessWeek.com, 2/16/07, "Dell's New Blood: Cannon, Now Garriques").

In the past, Dell's product development teams would flip-flop about once a year, spending about the same amount of time on consumer and business machines. The new division has teams devoted entirely to developing consumer models, a recognition that the nonbusiness market requires more frequent product introductions, says Alex Gruzen, a senior vice-president in the consumer business. The company, says Gruzen, has realized how fast the consumer market moves and aims to launch new models at least twice as frequently as in the past. "We'll be back in the fall with more products. We want to be fresh for each season," Gruzen says.

The bid to boost consumer sales also has led Dell to hire experts in ergonomics and industrial design, plucking individuals from makers of cell phones and even nontechnology products, as well as other computer sellers. Gruzen wouldn't disclose hiring figures but says Dell has brought in so many that it's now seeking more office space: "We're bursting at the seams."

"Big Step"

The new Inspiron products are designed to look and feel sleeker, thinner, and lighter than the existing lineup. The laptops are available in eight colors with a satinlike finish on the lid. The machines are available with high-end features including fingerprint recognition and built-in modems compatible with the wireless Internet services offered by cell-phone companies. The new products also include an XPS laptop that Dell sees as direct competition for Apple's (AAPL) popular MacBook. By Dell's calculation, the XPS M1330 is thinner and about a pound lighter than the MacBook, says Gruzen.

The new Dell models aren't among the handful being sold at Wal-Mart Stores (WMT). The big retailer began carrying two inexpensive Dimension desktops on June 10, marking Dell's first major breakaway from its long-time business model of selling directly to consumers only over the phone and Internet (see BusinessWeek.com, 5/24/07, "Dude, You're Getting a Dell—at Wal-Mart"). While the new computers, aimed at the back-to-school crowd, will be on display at Macy's for a few days, consumers won't be able to buy any on the spot. Instead, they'll need to place orders by phone or on Dell's Web site. Gruzen hinted that the new models may be sold at another retail chain in the future but wouldn't elaborate.

"Style, design, finish, color—it's a big step for us," Gruzen says, stressing that competing on price can become less of a focus with a more compelling product line. "All this stuff matters to customers. They want color, a sleek look." That said, even the latest and jeans and tops at Macy's occasionally land on the clearance rack.

Lee is a correspondent in BusinessWeek's Silicon Valley bureau
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