Dell adopts the retail strategy again by opening two new retail stores at Dallas and New York.
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On May 24, 2006, the US-based Dell
Computers (Dell), the world’s largest PC manufacturer,
announced its plans to open two retail stores one at
NorthPark Center in Dallas and the other at Palisades Center
in West Nyack, New York. Dell, a pioneer in the direct
marketing model, adopted this shift in strategy as it faced
stagnant sales and intense competition from rivals like
Apple Computers Inc1 (Apple) and Hewlett Packard (HP)2, who
sold their products through retail channels and online
stores. Analysts cited Dell’s decrease in market share as
another reason for it to take up the retail initiative. Dell
had reported market share of 18% in the first quarter of
2006 compared to 18.9% in the first quarter of 2005.
Dell also changed its Intel-only tradition when it announced on May 20, 2006, its
plans to include AMD Opteron3 in its servers as part of its efforts to
generate growth in its servers business as it reported lower growth using
Intel’s microprocessors.
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Some analysts explained that Dell’s motive behind opening retail stores was
because customers preferred to handle and test products like personal and
notebook computers before buying them. This was a limitation in the existing
direct marketing model.
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[1] Apple Computer Inc was launched on April 1, 1976 by
Steven Wozniak and Steven Jobs. It posted a revenue $5.75 billion in fiscal
2006.
[2] Hewlett-Packard Company (HP) is one of the world’s largest information
technology corporations.. Headquartered at Palo Alto, California, United States,
it has a global presence in the fields of computing, printing and digital
imaging, and also sells software and services. It reported revenues of US$ 86.7
billion in 2005 and had over 151,000 employees across the world.
[3] AMD Opteron is a microprocessor designed by Advanced Micro Devices (AMD), a
computer chip manufacturer. It was designed to scale from one to eight
processors with no external logic required, which aids system designers by
reducing the cost and complexity of building servers and workstations.
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