Dell to Expand Push Into Classrooms

Dell already controls 44 percent of the market for computers and computer equipment to U.S. schools and colleges, according to research firm International Data Corp.

"Sure we can grow it," Dell said Monday. "I think it's fair to say we're going to be growing faster than the market."

The company plans to increase sales to schools the same way it grew in the corporate and consumer markets " by undercutting rivals on price.

Round Rock, Texas-based Dell also is pursuing the school market by bundling computers with projectors, cameras, interactive whiteboards and tablet PCs " some made by Dell, some made by partner companies " to create what it calls the "intelligent classroom." The company announced the strategy Monday at an educational computing conference in New Orleans.

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Dell, who plans to step down next month as CEO but remain chairman, said in an interview that his company also aims to increase classroom sales of printers and will manage technology systems for schools.

"A lot of these schools are realizing as many corporations have that they really don't want to be in the business of managing all this themselves, so they have turned to Dell to do that," Dell said.

For example, New York City schools contracted this year with Dell to handle virtually all of its technology needs, including PCs, notebooks and printers, and provide installation; help desks and recycling. The deal, covering five years with two option years, could be work up to $595 million.

Dell's share of the U.S. education market in the first quarter of 2004 was more than three times the sales of its nearest competitor and one-time market leader, Apple Computer Inc., at 14 percent, according to IDC. Hewlett-Packard Co. had 11.3 percent, Gateway Inc. 6.2 percent and IBM 3.7 percent.

Shipments to schools and colleges grew 36 percent from 1999 to 2003, but Dell's shipments more than tripled in that that time while the rest of the industry combined saw a 4 percent decline, IDC said.

"Dell has been very successful on a price and service-agreement basis " they cut good deals," said Kenneth C. Green, director of The Campus Computing Project, which tracks technology use in higher education. "These are commodity products now, so price is very important." Green said many colleges recommend Dell models to their students, who may already be familiar with the brand from using one at home.

Dell said no one should be troubled by his company's huge share of the education market, or that Dell plans to increase its lead. He said school districts are operating more like businesses these days, and they want the lower prices that can come from dealing with a huge company.

Dell said his company deserved credit for lowering prices that schools pay for computers. IDC said the average sales price of a computer system sold to schools and colleges fell 38 percent from 1999 to 2003. Dell said its average selling price during that span dropped 46 percent. On another topic, Dell said he was not worried by an analyst's report that suggested notebook shipments in the second quarter may be weaker than expected.

Emily Chang, a Lehman Brothers analyst in Taiwan " home to suppliers for Dell and others who sell notebooks " said shipments would rise 12 percent instead of the 15 percent to 16 percent that other market watchers had expected because of customers' worries about high interest rates and oil prices.

Dell declined to comment on second-quarter sales, but he said reports from Taiwan were unreliable because the suppliers don't have a good grasp of demand. "We know what the demand is because we sell to the actual end customer," Dell said. "Our business is doing very well."

Notebooks account for about one-fourth of Dell's revenue. Dell shares fell 19 cents, to $34.62, in trading on the Nasdaq Stock Market.