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Dell Branches Into 'White Box' Market

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Dell Computer has begun an effort to capture a piece of the market for "white box" PCs, marking a move back into the distributor market that the company abandoned in the early 1990s went it decided to go with its highly successful direct sales model.

White box PCs are unbranded desktops, often put together from parts by small- to mid-sized suppliers, and sold to distributors, who can then sell the machines as their own.

Dell estimates white box PCs account for about $3 billion a year in sales in the U.S., and IDC says such unbranded PCs now account for about 30 percent of the overall PC market.

White box PCs are often sold to distributors for considerably less than what large manufacturers like Dell sell their machines for, but by bringing its weight to bear, Dell hopes to create a new dynamic in the marketplace by offering dealers sales incentives like favorable leasing terms and discounts.

Dell will begin offering un-branded PCs to the market this week, aiming to capture about $380 million in new revenue over the next 12 months.

Looking farther ahead, the company said it could expand beyond desktop PCs to offer both notebook and servers to the white box market. Such a move could radically alter that market, which until now has only had access to desktops.

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