Dell Computer is teaming up with Excite, AT&T, and SBC Communications to offer a package of high-speed Internet access, search, and personalized home pages to its customers.
Under terms announced Wednesday, Excite's search engine and Internet directory will be the first screen that Dell Dimension customers see when they connect to the Internet. Separately, Dell customers can connect to the Internet through AT&T's WorldNet Internet access service. Or, customers can choose SBC's high-speed ADSL services. Dell and SBC plan to begin offering the needed ADSL equipment and services by early next year to cities in Texas and California.
"This is a big day in Dell's history," said Paul Bell, senior vice president at Dell, in a conference call. "Our strategy is to allow customers to have easy, fast, and personalized access to the Internet." Bell said more announcements are forthcoming.
The agreements will make it easier for Dell customers to connect their PCs to the Internet, currently a cumbersome task that can involve calls to several companies. Excite (XCIT), SBC (SBC), and AT&T (T) also will get more exposure through Dell, which is the world's second-largest PC maker after Compaq.
"It's an example of how all the PC companies are entering marketing agreements with ISPs," said Philip Rueppel, analyst at Bankers Trust Alex. Brown in New York. "Dell is kind of late to the party."
Rueppel said similar deals have been done by Gateway and Compaq (with Yahoo as the start page), but Dell's is unique because it promotes ADSL as the next generation of connectivity.
"I wouldn't be surprised to see bigger deals from Hewlett Packard and others," he said.
The deal is also the latest move by a search engine to be tied closer to the hardware. Netscape Communications' Netcenter Internet directory pops up automatically in the Netscape browser when first installed. Microsoft's Internet Explorer also has links to draw Internet users to Microsoft sites. The deal with Dell gives Excite a similar arrangement.
Excite shares surged $9.38, or 33 percent, to $37.75.
"It's definitely positive for Excite," said Andrea Williams, analyst at Volpe Brown Whelan. She said the financial implications are not yet clear, but the incremental revenue Excite sees from advertising "will exceed the cost."
The deals aren't exclusive. Dell already has an agreement with telecom company US West (USW), said Bell. US West will rollout ADSL access to customers in areas they will service. Dell will sign up more ISPs for its customers to choose from, but has "no plans currently" to work with portals other than Excite, said Bell. "Nothing is exclusive at this point," he said.
Dell shares rose $4.31 to $64.38. AT&T rose $1.06 to $59.50 and SBC rose $1.56 to $42.50.
