Michael Dell’s latest scheme to move from fabulously wealthy to stinking rich focuses on talking you and me into leasing our next personal computer.
Dell Computer Corp., of which Michael Dell is CEO, makes its mega-millions exploiting the rolling obsolescence that has vexed the rest of us ever since Internet mania set in a half decade ago like a visiting uncle who just won’t go away.
Only this is a visiting uncle who tells you every 18 months or so that you need a new house–an updated PC in this case. If you had a 386 you needed a 486 and then the 486 wasn’t good enough and you needed a Pentium 75 MHz. Then the Pentium 75 MHz wasn’t good enough and you needed a Pentium 166 MHz with Intel MMX (multimedia extension).
Now the cranky old guy is raving about how you need a killer 300 MHz Pentium II and a gaggle of gigabyte glories to match.
But guess what, friends and neighbors? Right now virtually nobody needs the new PCs now pouring off the assembly lines with those Pentium II chips, 6-gigabyte hard drives and 64 megabytes of RAM.
Oh sure, we’ll need killer boxes soon enough. But here and now there is virtually nothing to be bought in the way of software that needs the horsepower of today’s top-of-the-line Pentium II machines.
And so Dell, who like other industry leaders had heretofore offered leases only to blue-chip business customers, now proffers leases to the rest of us. He’s doing it because the world is starting to figure out that this isn’t exactly the best time ever to buy a new personal computer.
If you buy one of the killer 300 MHz Pentium IIs right now, it will be pretty obsolete in two years when 450 MHz and even 700 MHz machines are commonplace and when yet another musclebound computer line (probably Pentium III) starts appearing on the horizon.
This all-too-familiar frustration is known as Moore’s law, the dictum coined by Gordon Moore, co-founder of Intel Corp., who noted that every 18 months the power of computer chips doubles and the price of the previous generation drops by half.
The problem this time around is that while Moore’s law continues as before for hardware, the software makers have yet to come up with significant programs that require the current leading-edge machines to run.
Already analysts are warning that this dismaying disconsonance in the traditional hardware/software dynamics bodes ill for sales of the costly new machines.
Enter Dell’s 24-month home computer leasing scheme.
It isn’t cheap. It isn’t fair. It isn’t easy and it isn’t pretty. But it might be just the ticket for many of us right now.
It’s a lot like leasing a car, only even more annoying. After all, we’re talking appliances here, not transportation.
At the low end, you can lease a $1,929 sticker price Pentium (not at Pentium II) 200 MHz MMX Dell Dimension machine with all the binary buzz bombs you’ll need right now for $86 a month for 24 months. Like cars, you put the first and last payments down at the start along with any taxes and shipping, so the first payment would be $172 plus.
The biggest, hottest computer on Dell’s lease list is a Pentium II 300 MHz howler with 64 megs of RAM and an 8.4 gigabyte hard drive and all the other trimmings for $3,149, or $140 per month after the $280 down payment, plus shipping and taxes.
After 24 months you’ll either have to turn the box back in to Dell (you pay the return freight) or buy it for “fair market value.” Dell spokesman T.R. Reid assured me that this probably won’t be any more than 15 percent of the initial price, which adds up to $472 for the Pentium II.
Reid also promised me that if lease holders want to add cards and make other modifications to their leased computer, they can do so after first clearing it with the company’s leasing department.
Of course, 24 months after you sign on the bottom line you’ll have to remove your stuff and ship the box back to Dell. Or you could keep it by shelling out another four or five C-notes, in which case you would have been better off paying cash or even putting it on plastic.
Like I said, it isn’t pretty, but, for the more ardent among us MHz-starved propeller heads, it just might make sense.
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Binary Beat readers can participate in the column at chicago.tribune.com/tech or e-mail jcoates@ameritech.net.
