Is Dell's growth sustainable?
Published: 02 Nov 2004 14:49 GMT
Are there opportunities for Dell in the smart phone or hybrid PDA-mobile phone market?
We think there's a convergence [coming] eventually, but we're still not convinced that there is an opportunity for Dell there. So we are just waiting to see.
What's the issue? Does it have to do with working with network providers?
No. The big hang-up, again, is profit. Where is the money made? Selling $199 products is very, very difficult to make a lot of money on, versus $1,000 or $2,000 PCs -- or $50,000 server clusters. Secondly, there are a lot of great companies who are just gorillas in that market already, like Nokia, Motorola and Ericsson.
How long are new Dell products allowed to exist before they have to be profitable?
We haven't set a hard and fast [rule], but we insist that before we get in... we have a road to profitability. We have a pretty low tolerance for losing money. So I would say kind of between one and two years, but not any longer than that.
Can you give us an assessment of how televisions are doing?
As everybody knows, the TV market really was disappointing all of last year. It just didn't take off, and I think it was because prices were too high.
What was the goal behind adding plasma-screen TVs?
We think that now we're ready to take that next step, which is in a few more models of TVs. But we're not going to do 61-inch; we're not going to DLP [a type of TV that uses a digital light projector chip to put the image on screen]; we are not launching all of the categories of TV that we could. We'll see how it goes, step by step. The good news is our financial results are really not dependent on whether the TV works or not.
We have a pretty low tolerance for losing money.
What would make it successful?
First, I want the prices to come down. I think the key success factor is not how many sizes. I think: "Can we get the 42-inch (plasma TV) product down below $1,000?"
How can you do that?
I think the (screen) manufacturers just need the size, the volume and the time to do it... Those prices will start to move down in the same way that now you can get a flat-panel monitor for $300. Those used to be $2,000.
What about other consumer electronics products Dell could offer?
Well, right now, I do not think there is a ton. We are trying to stay very close to the PC. The (digital) camera, at some point, might make sense. But I am not trying to announce one. For the time being, I think printing and imaging associated with that, colour -- both inkjet and laser -- is really the big push. We will continue to broaden that product line... and [add] a few more televisions.
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