“In recent months, Dell has been testing a digital music player that could go on sale as early as September, said several Dell officials. Launching the player — along with an online download service and related software — would be part of a strategy that Dell Chief Executive Michael Dell hopes will move the company into a broader range of consumer markets than it has served before,” Juston Scheck reports for The Wall Street Journal..
“When Dell stopped making music players in 2006, its U.S. market share remained below 3%, estimated analyst Rick Doherty of Envisioneering Group, who follows the MP3 player market,” Scheck reports. “This time… instead of simply selling a piece of hardware tied to someone else’s music service, as it did in 2003, Dell is working on software for a range of portable PCs that will let users download and organize music and movies from various online sources.”
“The music player Dell has been testing — the product’s name couldn’t be learned — features a small navigation screen and basic button controls to scroll through music play lists. It would connect to online music services via a Wi-Fi Internet connection, and Dell executives said they would likely price the model currently being tested at less than $100,” Scheck reports.
“Rob Enderle, an industry analyst whom Dell hired to consult on the new entertainment strategy, said he is still discussing with Dell whether profits would come mainly from the subscription service or from devices tied to it,” Scheck reports.
“Apple had 71% of the U.S. MP3 player market in the first quarter of 2008, according to industry analyst NPD Group. Apple’s closest rival was SanDisk Corp., with 11%. Microsoft, which introduced its Zune music player in 2006, had just 4% of the market,” Scheck reports.
“The new plan could strengthen Dell’s consumer brand, said Mr. Enderle,” Scheck reports. “Dell is tapping ex-Apple expertise to make its foray. Its device is based on software developed at Zing, a company Dell acquired last year and which is headed by an Apple veteran. Mr. Tatelman said Zing software can be used to retrieve and organize online music, movies and photos, and will come pre-installed on a series of new Dell notebook computers and other devices.”
Full article here.
[Thanks to MacDailyNews Reader “Macaday” for the heads up.]
We thought we’d seen pretty much everything. We were wrong. The “Wow” really started as soon as that WSJ headline popped up this morning. When it was first shouted out, ringing through the cavernous halls of the palatial MDN headquarters, it was greeted with a chorus of yeah-rights and then quickly followed by shocked silence as the URL loaded up in Safari on our pristine MacBook Pro screens. Wow.
So, not only is Dell is planning yet another DOA MP3 player they’ve hired Rob Enderle as a consultant. Rob Enderle, quote whore for hire. Of the Enderle Group, which consists solely of Rob and his wife, Mary. And, you thought the Zune was late to market? Dell’s nuts.
Dell shareholders: Be afraid, be very afraid.
We would be remiss if we didn’t point out that there is still the possibility that Dell will come to its collective senses, as Scheck points out in the full article that “Mr. Tatelman said he will decide ‘in a few weeks’ how to proceed with the music player, and that he may decide not to sell it at all.”
Even if they don’t do it, Dell shareholders should be very afraid that this has come this far, that not only has Rob Enderle been consulted, he’s actually been hired, and that Dell has no hope of competing with Apple on the high end and is therefore consigned to pimping their low- or no-margin OS-limited PCs on Wal-Mart shelves, trying to generate more than double Apple’s revenue in order to make 3/4 of Apple’s profits*.
*Last quarter: Dell posted $16 billion in revenue to make $784 million net quarterly profit. Apple posted $7.46 billion in revenue with $1.07 billion net quarterly profit.
