U.S. court lets stand Verizon deregulation

federal appeals court on Friday let stand a 2006 action by the U.S. Federal Communications Commission that lifted some regulations on Verizon Communications broadband business.
The Court of Appeals for the District of Columbia said it would not review a challenge, filed by Sprint Nextel, other telecommunications carriers and the New Jersey Division of Rate Counsel, that contested the way the FCC decision was reached.
At issue was a petition by Verizon to the FCC asking the agency to waive regulations on its broadband business on the grounds that they were no longer necessary. Under federal law, such a petition is deemed granted if the FCC does not act on it within a specified period of time.
The FCC never formally approved a decision on Verizon's petition, but the company's request took effect in March 2006 because the FCC commissioners were deadlocked on the issue. The agency's two Democratic commissioners objected to broad deregulation, saying it threatened to bring higher prices and less choice.
The court said it agreed that the deadlocked FCC vote did not represent denial of the petition and that Congress had directed the agency to treat a petition it does not deny as granted.
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"The deadlocked vote cannot be considered an order of the commission, nor can it constitute agency action," it said.
"We also recognize that because a deadlocked vote is unreviewable, we lack jurisdiction in what may be the hardest case--cases in which the forbearance petition raises such difficult issues that it produces an equally divided vote among the commissioners," the three-judge panel said.
The FCC declined to comment on the court ruling.
Among other things, the broadband service regulations lifted on Verizon included requirements for making connections to competing networks and negotiating just and reasonable terms for its services.
The Verizon case prompted criticism from some members of Congress, and the agency is reevaluating its procedures for so-called forbearance cases.
The Friday court ruling was posted on the Internet (PDF).

A new electrode for cutting the price of making hydrogen

A new electrode for cutting the price of making hydrogen
Posted by Michael Kanellos
Although hydrogen is the most abundant element in the universe, it's a royal pain to make.
Most industrial hydrogen producers currently make the gas by heating methane and water to 815 degrees Celsius and causing a reaction. Unfortunately, this process generates 9.3 kilograms of carbon dioxide for every kilo of hydrogen, so it's not environmentally friendly or cheap.
Other companies like Signa Chemistry have come out with chemical catalysts that can strip hydrogen from water.
Then there is electrolysis, which involves cracking water molecules with electricity. Electrolysis doesn't produce any greenhouse gases or chemical residues so it's the most environmentally friendly. It's also expensive and time consuming. QuantumSphere says it has a way around this problem.
It has devised an iron-nickel power for coating an electrode that speeds up the electrolysis process, according to CEO Kevin Maloney. It's a classic nano play. Coating a surface with small, independent particles increases the reactive surface area, which means more simultaneous reactions between molecules. Quantum's Stingray electrodes have more than 2,000 times more catalytic surface area than standard electrodes coated with standard sized particles, he said.
The Stingray can produce 2.4 kilograms of hydrogen in 25 minutes. Standard electrodes can take hours or days, he said. As a result, the Stingray can produce hydrogen at $2.50 to $9 a kilo, not including subisidies. That's in the range that excites the Department of Energy.
No, the hydrogen economy doesn't exist yet. But researchers around the globe continue to ponder ways to produce, store and transport the stuff cheaply. Some car makers still maintain that hydrogen cars will come out within a decade or so.
A spin-out from Caltech, QuantumSphere also makes particles for rocket engines and other industrial applications. We wrote about them a few years ago here

Killing fungi and bacteria, the Aussie way

Killing fungi and bacteria, the Aussie way
Posted by Michael Kanellos
HALF MOON BAY, Calif.--Chlorine is bad for you, and iodine isn't, points out Jared Franks, CEO of Ioteq, and that difference is the basis of the company's business.

The Australian company has come up with a water purification system that kills microbes with iodine rather than chlorine or ozone. Ioteq's Isan system basically immerses fruit and vegetables in iodine-soaked water, and monitors the iodine dosage.
After purification, the produce gets bagged and sent to grocery stores. The process leaves a minimal iodine residue that is not harmful to people--and it doesn't change the flavor, Franks said. Iodine is a nutrient used by the medical profession to clean germs. The residue can also be washed off.
Not only does the iodine kill microbes, it extends the shelf life of produce. Some Australian customers are able to keep cherries on store shelves for eight weeks--far longer than normal, Franks said during a presentation and a meeting at the AlwaysOn Venture Summit West here Friday.
The water in the Isan system can also be used several times, which cuts processing costs. The system sucks the iodine out of one purification cycle and sends the water back to the start of the process. With water in short supply in places like Australia and California, that's a big deal, Franks said.
While Ioteq currently sells its products to food growers, it hopes to branch into the municipal-water market, selling large-scale systems to water districts.
It has installed 150 systems so far.
Agriculture and water are often overlooked, but they are two of the growing wings of the clean-tech market. Organic produce is booming, and grocery markets and organic growers, of course, can't use chemicals to kill fungi or bacteria.
Farmers, meanwhile, have been stung by spinach recalls. Municipal-water districts are currently going through upgrades of their systems. And consumers complain about the chemical taste of tap water.
As a result, companies such as AgraQuest have devised biopesticides while others, such as Novazone, have come up with ways to disinfect harvested food with ozone.
Ioteq claims that it has an advantage over ozone systems in capital cost. Its purification systems cost only $5,000 to $15,000, less than the equipment required for ozone treatment, he said. (Novazone has said its systems cost closer to $100,000, but the throughput of the systems is different. I'll try to do a more detailed comparison later.)
Interestingly, Ioteq doesn't make much money on the hardware. Instead, the profits come from selling iodine to its installed base. The iodine market, Franks added, is fairly stable. It comes from Chile and Japan, and the price doesn't fluctuate much.
Chlorine as a chemical costs less, he admitted, but Ioteq's Isan system needs fewer chemicals to get the job done. The Isan system needs only about 30 parts per million of iodine to clean fruit. Chlorine needs about 200 parts per million.
As they say in the water business, it's a wash at that point

How PCs lost their expensive cachet

perspective It was something to behold while it lasted. But as happens with nearly everything in life, the fad that was PC mail order has just about run its course.

Oh, you can still buy a computer direct--either by making a 1-800 telephone call or by logging onto a corporate Web site. But that's a world away from what I'm talking about.

It wasn't long ago that you could choose among scores of PC mail-order outfits making first-rate machines every bit as good as those offered by the IBMs and Compaqs of the world. And then there was Dell Computer and Gateway, two direct resellers in a class by themselves. Publicly traded companies with billions of dollars in annual sales--and billionaire CEOs to boot--they were lauded in countless business-magazine cover pieces extolling the latest turn in old-fashioned American entrepreneurship.

Say goodbye to all that.

After its most recent anno horribilis, Dell increasingly sees its future in retail.

Gateway, which stumbled its way into irrelevance for much of the last decade, now operates as an arm of Acer. As for the rest of that once-plucky cohort of no-name direct sellers, most are insignificant, at best, or fly-by-night operations at worst.

These days you have no excuse for getting ripped off. If you pay too much for a computer, it's your own fault.

Maybe all of this was foreordained. After all, how many multibillion-dollar industries can you find where mail order trumps retail distribution by a wide margin? But for a brief period, the mail-order crowd was to give the mainstream one helluva run for the money.

Like the tech enthusiasts and computer clubs that formed at the dawn of the personal computer era, that first crop of entrepreneurs was a unique bunch. A few accumulated fortunes. Some sold out before the good times ended. Many--maybe most?--ultimately went bust. But before they left the scene, direct-sales specialists like Gateway's Ted Waitt, Art Lazere at Northgate, Greg Herrick at Zeos, and of course Michael Dell, who's still at the helm of his eponymous company, were responsible for forcing computer makers to make machines that regular folks could afford.

If you recall, that wasn't always the case. In the mid-1980s a fully loaded PC XT or PC AT sold by IBM or clone makers like Compaq or AST Research cost several thousand dollars, depending upon the configuration. Those fat profit margins helped pay for a cumbersome distribution system that relied upon computer retailers.

Some computer resellers were very good at their craft. Companies like Businessland, Entre, and Inacomp went public and for a time did quite nicely. For the most part, however, the computer stores were fat and happy order takers. They got away charging big premiums because PCs were still a novelty for most people. If you wanted to buy a computer, what alternative did you have other than to build your own?

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The mail-order guys exploited that opening for all it was worth. At first, their rising popularity was mostly related to the lower prices they charged. In time, though, they became masters of improvisation and would learn how to beat the old-line computer companies in the new-features competition. At one point, Big Blue fell so far behind the mail-order makers that it panicked and started a separate direct-sales company based in Raleigh, N.C.

But you can stay dumb for only so long.

In time, the rest of the industry figured out how to squeeze inefficiencies out of their distribution systems and became far more nimble. The emergence of the Internet was the game changer. Big computer companies that previously avoided channel conflict like the plague seized upon the new technology. Relying exclusively on retailers no longer made sense. The new mantra: let the customer decide where to buy the product.

The dominos fell quickly. Direct vendors lost their advantage as every computer maker worth its salt now also was a direct vendor. The PC was always a commodity--only dressed up as something more than that. Now there is no returning to the days of Fat City. These days you have no excuse for getting ripped off. If you pay too much for a computer, it's your own fault.

Remember that next time you go shopping for a new PC. And while you're at it, how about a holiday note of thanks for the entrepreneurs who helped make it happen.

Wi-Fi 'illegal images' politician defends legislation

The Democratic sponsor of a bill forcing anyone with an open Wi-Fi connection to report illegal images--or pay fines of up to $300,000--says a recent Internet outcry over the legislation misses the point.

Rep. Nick Lampson, D-Texas

(Credit: U.S. House of Representatives)

Rep. Nick Lampson of Texas, who drafted the bill that the House of Representatives approved this week, said through a spokesman on Thursday that he didn't actually mean to target Americans who happen to have Wi-Fi access points at home. The legislation also covers social-networking sites, domain name registrars, Internet service providers, and e-mail service providers such as Hotmail and Gmail.

Lampson's spokesman, Trevor Kincaid, sent me this e-mail about the Securing Adolescents From Exploitation-Online Act, or SAFE Act:

It is NOT the intent of the SAFE Act to target Wi-Fi providers but rather the entities that provide the internet to those conduits.

With that said--child pornography is illegal, grotesque, and has become a global epidemic. The Internet serves as virtual hunting preserve for pedophiles and predators to prey upon innocent children. So, while this bill is not intended to impact the groups you reference, those groups, all of us, have a civic and moral obligation to report these criminal acts that exploit and traumatize children.

He responded to privacy concerns with this:

Since child pornography is illegal it is material that is NOT protected by the first amendment. Therefore, the SAFE Act is not infringing upon a person's civil liberties.

I wrote back:

You say that the "intent" was not to force Americans with open Wi-Fi connections in their homes, but a court will typically not consider congressional intent--it'll look at what the law says. Why does the bill not exempt Wi-Fi and private individuals from its relatively strict requirements?

Will you try to work with the Senate to tweak the language so it doesn't cover WiFi connections and private individuals? Because you said that he did not mean to target WiFi networks, can I take your response to mean that inclusion of such language was a mistake that will be fixed? I mean, it wouldn't seem to be a major change--just the addition of one sentence or so.

Kincaid replied:

I never said Rep. Lampson "didn't mean to target WiFi." Rep. Lampson added teeth to pre-existing law in hopes of cracking down on a $5 billion a year child pornography business.

We are constantly discussing the bill as it moves through the Senate, but I cannot speculate whether or not any changes will be made to the House version. Mr. Lampson's goal is to stop the trafficking of child pornography on the internet without dissolving civil rights; this bill will take big strides to accomplish that goal.

So what exactly does the SAFE Act do? It doesn't mandate ongoing network surveillance. What it does require is that anyone providing Internet access who learns about the transmission or storage of information about illegal image must (a) register their name, mailing address, phone number, and fax number with the National Center for Missing and Exploited Children's "CyberTipline" and (b) "make a report" to the CyberTipline that (c) must include any information about the person or Internet address behind the suspect activity and (d) the illegal images themselves. (Note that some reporting requirements already apply to Internet access providers under current law.)

The definition of which images qualify as illegal is expansive. It includes obvious child pornography, meaning photographs and videos of children being molested. It also includes photographs of fully clothed minors in unlawfully "lascivious" poses, and certain obscene visual depictions including a "drawing, cartoon, sculpture, or painting."

Most reasonable adults, including home Wi-Fi providers or the Web sites affected by this legislation, can figure out what actual child pornography is. But when it comes to photographs of fully clothed minors in "lascivious" poses, and overly risque cartoon anime that might be "obscene" in one area of the country and permissible in another, it becomes trickier--especially when, legally, only a jury can determine whether an image violates local community standards.

The real problem, I think, is that Lampson probably drafted this legislation a little too hastily. It didn't go through the normal committee process and was rushed to the floor without the final text being posted until the day after the vote. That may be why its requirements apply to anyone providing an "electronic communication service" or "remote computing service"--terms that were clear back when the only Internet service providers were AOL or Netcom.

But now that anyone with a Wi-Fi connection (or any school, or library, or coffee shop) can be an ISP, it's not sufficient to borrow definitions written in the 1980s. That's one reason why the usual back-and-forth process of public hearings, disclosure, and debate can actually be helpful on occasion.

Xbox, Gamefly beef up music offerings

Looking for ways to offset sagging CD sales at record stores, music industry looks to video games as method of distribution.

As record stores stock fewer music CDs, the music industry is turning to video games as an alternative method of distribution. Both Microsoft, developer of the Xbox 360 game console, and online game rental service GameFly introduced new music initiatives.

Microsoft has added downloadable music videos from Sony BMG to the Xbox Live Marketplace. Free promotional videos have been available on the platform since its November 2005 launch, but the new iteration adds a pay-to-download option featuring a far greater catalog.

More than 40 Sony BMG videos are available now, featuring artists like Alice In Chains, Audioslave, Dave Matthews Band, Foo Fighters, and more. Each video will cost 160 Microsoft Points (about $2).

Microsoft says this is merely the "first wave" of content, suggesting more videos from additional labels will appear at some point. The videos can't be transferred to Microsoft's Zune device, but company officials say that functionality is expected in the future.

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Meanwhile, GameFly has begun giving away five digital downloaded tracks a month to members of the online game rental service. GameFly and partner Brandracket--a music licensing and marketing agency--will select the five songs. Anyone visiting the GameFly Web site will get one of the songs, while only subscribers can access the other four.

The featured tracks will be a mix of emerging and established artists. Among those available at launch are songs from RJD2, Thievery Corporation, Shadows Fall, OK Go, and Little Brother.

GameFly is also adding artist bio, links to more artist information, and links to iTunes to buy additional tracks

O2 hopes to nab iPhone clients from rivals

head of O2, which won an exclusive deal to sell the iPhone in Britain.

"Over time, three out of four (U.K.) customers of the iPhone will be new O2 customers, because you can only get the iPhone by becoming a customer of O2," Matthew Key, incoming head of O2, told reporters in London.

Key declined to comment on how many of the music-playing and Web-browsing handsets had been sold since its launch on November 10, but sales in the first few weeks have been in line with expectations, he said.

O2 has previously said it sold tens of thousands of the handsets in its first weekend, but the company has never revealed the commercial terms of its agreement with Apple, in which revenue is shared between the partners.

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Key is to take over as the top O2 executive from Peter Erskine, who is stepping down at the start of 2008.

O2 aims to consolidate its leading position in Britain and to recoup ground in the German market.

"Over the next three years, there will be 8 million additional DSL customers in each of these two countries, and we intend to take quite a share of it," he said.

"There are small acquisition opportunities in Germany, in the retail business, and perhaps in distribution," Erskine said, addeding

CAD software is the new black

When you think of computer-aided manufacturing, sexy lingerie is probably not the first thing that comes to mind.

But since the 1990s, fashion companies, including those that make delicates, have been employing the kinds of computer-aided design and computer-aided manufacturing, or CAD/CAM, software previously reserved for architects, designers, and engineers.

While pin-bearing seamstresses and mannequins are still used for couture, the maker of clothing bought off the rack is more likely a piece of software.

The recent introductions of artificial intelligence, better animation, and lifelike avatars are helping fashion companies, faced with increasing demands, to more quickly translate 3D visions into 2D materials.

Teenagers are demanding cheap "fast fashion" to go with their fast food, and there are now six or eight fashion "seasons" put out by some clothing lines that look to bring new clothes into stores every two months, said Holly Beum, director of software product management at Gerber Technology, a subsidiary of the publicly traded Connecticut-based company Gerber Scientific.

"We even call our product life cycle management software 'fashion life cycle management' because fashion differs from every other industry, in that we'll have six seasons in a year with thousands of products," Beum said. "If you're building an airplane, you have one product that takes most of a decade (to design). How many prototypes of an airplane are you really going to make?"

There are two leading companies offering software in this area. Gerber, originally known for its cutter textile machines, lists such clients as Gap, Liz Claiborne, Levi's, Carter's, Sears, Abercrombie & Fitch, and OshKosh. Lectra is a Paris-based company whose clients include Benetton, Calvin Klein, Christian Dior, Dolce & Gabbana, Fruit of the Loom, Eddie Bauer, and Gucci.

Lectra and Gerber each offers modular software packages, designed to meet specific fashion industry needs, that generally range between about $3,000 and $20,000 per seat depending on what modules are included. Both companies offer programs that focus on design, 3D prototyping, pattern making, size grading, nesting of the pattern pieces to maximize use of materials, and integration with automated textile-cutting machines.

"The smaller the organization, the more the person is required to do multiple things and use multiple or many of the pieces of software," said Jerry Inman, vice president of marketing for Lectra.

The software lets companies offer buyers more realistic previews on virtual models before things go into prototyping or production. And fashion engineering even extends into the marketing and brand-creation side of the business.

Lectra, for example, in March released Kaledo 3D Trend, an application it developed with Microsoft to work on the Vista operating system. It allows designers to create 3D animated storyboards from their designs complete with virtual models, photos, audio, and video. The company gives Kaledo 3D Trend away for free, and has seen a lot of interest from fashion design students.

Gerber offers V-Stitcher, a module for its AccuMark CAD program that lets designers evaluate how a piece of clothing will fit on a person by using virtual models. Lectra offers a similar product, Modaris 3D Fit, for letting designers see the fit and movement of a design in 3D and then translating that design into the 2D patterns.

Tailored for globalization

CAM software meshes well with globalization trends. Since the artificial intelligence in pattern-making software requires only the input of measurements, not information on how the garment is to be constructed, manufacturers are free to have their clothes made by labor anywhere in the world, Beum said.

"For example, a pattern development system with the most recent AI will insure that if you have a seam, that the two edges that go into that seam are at 180 degrees," she said.

Other software applications, such as Gerber's Vision Fashion Studio, allow a designer to create original fabric knits or weaves. They then convert that information into direct instructions for a textile mill. The software even accepts scanned fabric images from which to start a new design.

Such fashion-specific software is also helpful when it comes to grading, the process in which a clothing manufacturer creates a specific pattern for each size. While grading is based on a company's size standards, the programs help account for sizing systems and body types that differ from one country to the next.

Lectra and Gerber also have fashion industry-specific nesting software. Nesting, as in any CAM program, determines how best to lay out the parts in order to minimize waste of material.

This fashion software revolution is not restricted to large-scale clothiers. Even the sort of handmade clothing designer you might find on Etsy probably has some programming help.

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Other software providers include Colour Matters International, whose CM32 Professional for $4,500 per seat offers weaving, knits and draping plug-ins in addition to clip art and silhouette libraries. The company advertises itself as offering software for small-budget designers, but includes Urban Outfitters, Russell, and Dress Barn among its list of clients. Cad Cam Solutions' FashionCAD, another software application that does pattern making and grading, costs $1,295. PatternMaker Software's PatternMaker Deluxe, for $104, will draft and print a pattern based on the design and measurements entered. And SnapFashun, from the company of the same name, is another silhouette library that works as a plug-in with Adobe Illustrator.

And soon, there may be software for a whole different kind of fashion production: virtual fashion for avatars used in Second Life and other virtual worlds.

Lectra could be considering this type of service for its clients; Lectra Americas President David Rode attended the Moda e Technologia event at Boston's Institute of Contemporary Art on Tuesday, where the key presentations involved Second Life and My Virtual Model talking about the interest in brand-name clothing and accessories for avatars. Rode told CNET News.com that he's very interested to see how fashion executives respond to the idea of designing for avatars and extending their visions into the virtual space.

Dell--not the PC maker you used to know

news analysis Dell's high-profile marketing push this summer showcased its new line of pink, green, and red notebooks. But the most important color for the PC maker right now is Best Buy blue.

Dell has officially signed up Best Buy as a retail partner, the companies said Thursday. Several models of Dell's XPS and Inspiron PCs will be available at 900 Best Buy locations beginning after Christmas, including the very consumer-friendly XPS M1330 notebook, Inspiron 1420 notebook, and the XPS One desktop.

For a company that built its fortune and reputation on selling its products directly to consumers for more than two decades, the Best Buy deal marks a major historical shift.

"That's like going from being committed to one religion to being pagan," said Richard Shim, PC industry analyst at IDC. "They needed distribution, particularly to consumer retail, and Best Buy, that's center stage."

"That's like going from being committed to one religion to being pagan. They needed distribution, particularly to consumer retail, and Best Buy, that's center stage."

--Richard Shim, PC industry analyst, IDC

The move makes sense for Dell as, more and more, consumer retail sales are driving the growth in the PC industry. At some point Dell was forced to choose strict adherence to its historical business model or go where the money is. Being in front of consumers so they can see and touch a notebook or desktop before they commit to the purchase is important in a technology world where, increasingly, image is everything.

Plus, most people buying computers aren't as focused on the specific graphics card or processor their computer has. Rather, they want to see what colors it comes in and how durable and heavy a notebook will be.

Dell appears to recognize this. "We think people's shopping habits will mandate we have a presence at retail. People really want to see (the products)," Michael Tatelman, Dell vice president of consumer sales and marketing, said in an interview Thursday with CNET News.com.

While it's not the first retailer Dell has partnered with, Best Buy is decidedly different. It's the largest consumer electronics retailer in the U.S., and it epitomizes Dell's new commitment to putting its products directly in front of consumers, rather than just on a computer screen or in a catalog. Now Dell, which pioneered the model that cut out the PC retailer, will be just one of the other names on the shelf as consumers stroll the aisles--right next to Apple, Hewlett-Packard, Gateway, Acer, and Toshiba.

There are many reasons why this is a huge cultural shift for Dell. Among them, it's a whole different way of dealing with customers and selling them products, and most of the people in the company grew up on the direct model, with less experience in the PC retail market.

But it's also a necessary move.

"It's a big step for them. It's risky, but it's a gamble they had to make," said Shim. Dell has been ceding market share to HP for several quarters. As of the third quarter of this year, Dell shipped 27.8 percent of PCs sold in the U.S. HP is right behind with 24.1 percent of PCs shipped. And now it has to fend off an assault from Acer in the notebook category.

What it has going for it
Having Best Buy as a retail partner gives Dell deep coverage of all its target markets in the U.S.: Wal-Mart for the value-oriented customer, Staples for the small or medium business customer, and now Best Buy for mainstream retail customers.

While it's tough to compete with companies like HP and the fast-rising Acer that prove they understand the retail market, particularly in regard to notebooks, Dell does have a few things going its way: brand-name cachet and a renewed focus on industrial design that will make customers--used to seeing boring black or gray notebooks--give products like the XPS M1330 a second look.

An ambitious turnaround plan has been in the works since company founder Michael Dell returned to the chief executive's office in January. In April, he told employees that the company's direct model "has been a revolution, but is not a religion."

"Emotionally, the company was ready for it," Tatelman said. "The message was loud and clear that we were going to go and execute a multichannel strategy."

Since then, there have been deliberate changes to get a new consumer-focused business off the ground, including hiring high-level people with experience selling products in a retail environment.

The new retail strategy was first unveiled in May, when the company announced that some lower-end desktops and notebooks would be available in Wal-Mart and Sam's Club stores. In the past six months, they've continued to add to the list of retail locations worldwide, including Carphone Warehouse in the United Kingdom, Bic Camera in Japan, Gome in China, and Staples.

Michael Dell said last week during the company's earnings call with investors that more retail partners would be announced in some of the largest countries in the world. Best Buy is certainly not the end of this. The Best Buy deal brings the number of retail locations that sell Dell PCs to more than 10,000 worldwide. Dell's Tatelman said there will be another announcement regarding the retail availability of the XPS One before the Christmas holiday and it won't be a consumer electronics outlet. He declined to provide further details.

Though Dell did try retail back in the early '90s, the experiment didn't last long, chiefly because the consumer PC market was nowhere near as robust as today. So having to compete for consumer attention on the same shelves as its top competitors is new territory for Dell.

"It's going to be hard for them to make this change," said Shim of IDC. Dell is "used to having a very intimate relationship with customers."

Part of that relationship is having the exclusive attention of its customers buying a PC to upsell them on additional Dell items when they come to the company Web site. "Now it's no longer Dell saying, 'Hey, buy our printer.' Now it's a retail sales guy saying that if you buy a Dell system you can buy any one of these (other) printers," Shim said.

Other questions remain too. Like, how much will this cannibalize Dell's current direct customers? Dell says it expects a "pretty broad mix of folks" shopping both in retail partner stores and on its own Web site, but declined to say what kind of overlap there will be.

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Because Dell has only been selling through the retail channel in volume for a couple months, there's not enough data to tell if retail sales are affecting its direct sales, observed Stephen Baker, vice president of industry analysis for The NPD Group. The cannibalization "will happen, but the level of it is really undetermined," he said.

Also, the timetable may be off for Dell to truly cash in on PCs sold at retail. HP has been enjoying the spike in consumer retail sales for two years now, and growth does appear to be slowing. So did Dell miss the boat?

"There's plenty of growth left in (the) consumer (retail market), however I do think that the biggest growth is by the boards already," said Baker. "So to some extent they're a little late...There was a huge demand for notebooks for a whole bunch of reasons and Dell missed a big chunk of that."