DELL to Enhance Consumer Experience

Dell Inc. (DELL - Analyst Report) has started the new year with a new offering -- Ultrabook -- the thinnest and most powerful iteration of laptops. Earlier this week, Dell introduced the XPS 13 laptop. The ultra portable gadget is expected to enhance user experience with Intel Inc.’s (INTC - Analyst Report) latest technologies such as Rapid Start and Smart Connect, which will enable users to remain connected and responsive anywhere.

The Ultrabook will support huge file storage with 128/256 GB (gigabyte) solid state drive options, as well as an additional 100 GB of cloud storage through Dell DataSafe online application, for free. DataSafe Online protects data by placing backup copies on a secure storage site using Internet connection.

Dell’s XPS 13 is less than 3 pounds with 24-hour battery back-up and starts at $999. The Ultrabook, though a high-end product, is suitable for both consumer and corporate purposes. Dell’s XPS 13 could challenge Apple Inc.’s (AAPL - Analyst Report) MacBook Air in the rapidly growing market for ultra portable computers.

Apple’s latest version of MacBook Air is well equipped with its updated operating system, X lion OS and Intel’s Thunderbolt connectivity. The MacBook Air price starts at $999.

Dell’s entry into the Ultrabook market actually signals its exit from the netbook market, which is being cannibalized by tablets. Dell also intends to enter the increasingly crowded tablet market with its own tablet later this year. The new tablet will feature Microsoft Corp.’s (MSFT - Analyst Report) Windows 8.

Dell’s endeavor to boost the lackluster PC demand is based on the hope that the rise of smartphones and tablets could not curb the physical existence of PCs.

Apart from product launches, we are encouraged by Dell’s endeavour to expand production capacity in China. In a weak PC scenario, we think that Dell’s second operating unit in China could do well. Our assumptions are based on IDC’s forecast and the economic benefit (cheap labor and favorable inter-country business relationships) that Dell enjoys in China.

Dell currently lags Hewlett-Packard Co. (HPQ - Analyst Report), but is still ahead of Apple Inc.

Currently, Dell has a Zacks #2 Rank, which equates to a short-term Buy recommendation.

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