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Dell to cut back customizing of its PCs

From Bloomberg News

Dell Inc., the personal-computer maker that pioneered selling custom-made machines directly to clients, is moving away from its build-to-order model to reduce costs.

Dell is limiting the degree to which buyers can dictate specifications while expanding its line of prepackaged models, operations chief Mike Cannon said Wednesday. Dell will also outsource more PC manufacturing to partners, he said.

The company is working to revive earnings and win back customers after trailing Hewlett-Packard Co. in the PC market for six straight quarters. To fuel sales, Chief Executive Michael Dell last year abandoned a strategy of only selling to customers directly and put the company’s computers in more than 10,000 retail outlets.

Although Cannon declined to say how much Dell expected to save by limiting customer choices, he said global operations, including reducing build-to-order options, are “a significant part” of the $3 billion in annual savings Dell predicted this week that it would reap by 2011.

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“We don’t sell half a million different configurations,” Cannon said at Dell’s headquarters in Round Rock, Texas. “If customers don’t want that, we have to rip that cost out.”

Dell shares fell 38 cents to $19.95.


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