Dell closes kiosks to chase HP in retail sales

Company will concentrate on major retailers such as Wal-Mart and Best Buy to sell its PCs

Dell Inc. announced today that it will close its 140 retail kiosks around the U.S. as it turns its attention to major retail outlets.

To replace the company's kiosk sales, Dell will be focusing its sales efforts on selling its products through major retailers such as Best Buy Co., Wal-Mart Stores Inc., Staples Inc. and Guitar Center Inc., according to Bob Kaufman, a spokesman for Dell.

The company has already started closing the kiosks, and Kaufman said the last one is slated to close within the next few days. Dell will maintain about 50 kiosks outside the U.S., he added.

"The move makes sense," said Dan Olds, an analyst at Gabriel Consulting Group Inc. "They need to be in the same outlets as HP. Going into retail stores like Best Buy and Staples is the easiest and least expensive way to do it. HP's channel strategy is one of the reasons they have beat Dell in the market. This is particularly true with laptops, which are a fast-growing segment of the market. People want to see, feel and try out a laptop before buying it, and you can't do that online, and you might not have access to or know where to find a Dell kiosk."

Dell has operated the kiosks since 2002, mostly in shopping centers, malls and airports. The kiosks were staffed by Dell personnel, who could help customers see and try out Dell computers and accessories. Customers could order equipment at the kiosks to be shipped to them from Dell manufacturing facilities.

Hewlett-Packard Co. extended its already heady PC sales lead over rival Dell in the third quarter of 2007. Market research firm iSuppli Corp. reported that HP shipped 13.1 million PCs in the third quarter, in comparison with 9.9 million for Dell.

About a week after the iSuppli numbers were disclosed, Dell announced plans to begin selling desktop and laptop computers at Best Buy stores. Dell had long depended only on direct sales channels and its kiosks to sell its computers, but the company last summer began branching out to major retailers by signing up Wal-Mart to sell its equipment in its U.S. retail stores. Since then, Dell has added Staples and Guitar Center to the list.

"We're mainly doing this because our customers said they wanted us to," said Kaufman. "Being able to see and touch a computer, especially notebooks, is preferred. At the kiosks, they could see and touch them, but they couldn't take them home with them. Now they can."

Kaufman said closing the kiosks will cause the company to lay off personnel, but he declined to specify how many people would be losing their jobs.

Copyright © 2008 IDG Communications, Inc.

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