Dell Revamps Pricing Structure
Posted July 13, 2006
DALLAS, TX. — Dell Inc.
outlined plans Thursday to simplify pricing and reduce the number of mail-in rebates for consumers and small business as part of the computer maker's recent $100 million initiative to improve customer service.
Beginning next month, Dell said it hopes to reduce the number of promotions per product line by 70 percent and the number of promotions for any single product by 80 percent within the next 18 months.
Dell's largest PC production facility is located in Winston-Salem, N.C.
Ro Parra, senior vice president of Dell's Home and Small Business Group, said the new system should make it easier for customers. "They told us what they wanted and we're delivering what they asked for," he said.
The move comes as Dell shares have hovered near a 52-week low following several analyst reports questioning its future growth prospects and tough competition from Hewlett-Packard Co. and other computer makers.
While Dell saw its revenue grow by 6 percent in the first quarter, HP's jumped 10 percent. During the same period, worldwide PC shipments grew from 13.8 percent to 14.9 percent for HP, according to research firm Gartner. Dell, meanwhile, saw its share slip to 16.5 percent from 16.9 percent last year.
Shares of the Round Rock, Texas, gained 13 cents Thursday on the Nasdaq Stock Market to $22.51. The stock price has ranged in the past year from Wednesday's close of $22.38 to $41.99.
The plan announced Thursday will take effect in August, beginning with a reduction in mail-in rebates for Inspiron laptops and Dell televisions. Rebate cutbacks for Dimension desktops will come later in the year, followed by other electronics and accessories, software and services.
Part of the plan, Parra said, will involve doing away with paper-based rebate forms in favor of system for customers to file for their rebates electronically.