Dell Inc., which leads the market for selling computers to schools, plans to strengthen its grip by cutting prices and helping schools create digital classrooms, chief executive Michael Dell said.

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 in a conference call with reporters. “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.

Michael Dell, chairman and CEO of Dell, Inc., chats with Susan Patrick, head of the federal Office of Educational Technology on Monday at NECC 2004 in New Orleans. (courtesy Dell Public)

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 June 21 at the National Educational Computing Conference in New Orleans.

Dell, who plans to step down next month as CEO but remain chairman, said 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,” he 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 worth up to $595 million.

Dell isn’t the first company to woo education customers with a full-service technology package.

Six years ago, Gateway Inc. began marketing its Alpha Classroom initiative, a program that combined the use of mobile labs, handheld technologies, and wireless PCs to promote project-based learning in schools.

And Apple Computer’s Classroom of Tomorrow, a study of how the routine use of technology by teachers and students might change teaching and learning, has been around for more than a decade.

Other companies, including Hewlett-Packard Co. and IBM Corp., also deliver full-service solutions to schools.

Gateway spokesman Ted Ladd said Dell’s announcement serves only to reinforce a longstanding trend in the education market away from “point products” and toward more robust, full-scale solutions.

“We view this really as a catch-up announcement,” Ladd said. Where Gateway views itself as a market innovator, he added, Dell has always been “a fast follower,” content to pursue other companies into a market and then commoditize it.

Still, 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, at 14 percent, according to IDC. Hewlett-Packard Co. had 11.3 percent, Gateway 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 might 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.

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Dell Inc.

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IBM Corp.

Apple Computer Inc.

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