Everytime a PC company tries to make itself over as a consumer electronics company, I shudder. Why? If you are one of those poor souls who bought a Gateway device, you know what I am talking about. A company which does not have a track record in consumer electronics, like say Sony, is a bad bet because it means you will be left holding hardware with no support. Dell Computer, seems to have bucked the trend and slowly is making its way into the digital home.

Merrill Lynch analyst Steve Milunovich is might impressed by company’s foray into markets like photo, music, and gaming markets and more recently, the video market. He thinks that Dell’s breakthrough pricing is going to be the key reason. He is definitely pumped about Dell’s chances in the plasma and HDTV markets. On the music front, Milunovich, who is one of the few analysts I respect, thinks Dell’s music players will be bit of a damp squib.

We believe the Dell’s music devices will continue to have limited success.  Dell announced an iPod Mini competitor with the same user interface as the previous Dell Jukebox, which has not done that well.  Dell management said last spring that it intends to be patient in the MP3 market. The 5 GB Pocket DJ will sell for $199 versus Apple’s 4 GB iPod Mini at $249.  The larger 20 GB DJ will go for $249 for versus the Apple’s 4th generation 20 GB iPod at $299. The two biggest issues Dell customers have are viruses and integration.  Both play to the advantage of Apple.

A lot of people have misread why HP decided to team with Apple on IPod. Well there is very little room for improvement in perfection. Most people view IPod as a cool looking MP3 player. I see it as a device with the supremely elegant UI, a device that has paid attention to one little things: human beings don’t like to press or mess with more than three buttons on the consumer electronics devices. Play, stop and forward. Rewind is such an anti-human activity, for as a race we always want to get ahead and not back. TiVo adheres to the same principle incidentally.