Dell: Hitting the $80bn target

• Tags:
• Printers,
• Target,
• $80bn

John G. Spooner CNET News

Published: 08 Apr 2005 17:25 BST

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Dell starts by identifying a so-called profit pool — Dell printers represent one such pool. It then enters those markets and experiments with new products, pricing and delivery models, before making a concerted effort to expand its market share. Dell's more mature markets are where it aims to extend, by creating new types of products, peripherals and services as well as creating partnerships with other companies.

"Printers is one of those that's in the define phase and we'll move shortly into the growth phase," Rollins said. "It's pretty clear to us now that this is going to be a winner for us. Customers love the online ordering and the fact that they get 99 percent of [supplies like ink] delivered the next day."

Meanwhile, notebooks are already in the growth phase where "we want to drive share gain", Rollins said. "That involves developing a global product plan, simplifying the product and lowering the price. It's our intent, now, to continue in the growth phase with notebooks."

Servers are in the extend phase. Dell has launched new types of machines, including blades. It has also forged numerous alliances with companies including SAP and Oracle, allowing it to pair their software and services with its servers. Dell is also touting its work on grids and high-performance computing clusters, which basically string together large numbers of servers.

Services, Rollins said, cross the lines of its businesses. But the company remains interested in delivering offerings that are closely tied to its hardware, giving it an advantage in marketing Dell boxes and profits from both.

Dell is eyeing flat-panel televisions as an expansive business, with sales that would go to both consumers and corporations, he said.

More details on earnings
To underscore its strengths outside of desktop PCs, Dell will begin to offer more detailed earnings reports, CFO Jim Schneider said in a presentation. Dell will break out its separate product categories, including desktops, notebooks, servers, storage, software and peripherals and so-called enhanced services.

"I think what you're going to find is as you step back and break down this 16 percent growth in the [first] quarter — if that's the number we end up with — you'll see a much higher growth rate in servers, storage and (software and peripherals)," he said. "You'll have less growth actually from the old core hardware, if you will."

One reason Dell may be downplaying PCs is the anticipation of declining market growth. During the first quarter, for example, IDC predicts that unit share growth will be 10 percent versus the 16 percent average over the last six quarters.

"Nothing that we're very nervous about," Rollins said. "While the industry might be slower than people had thought, even a bit slower than we had thought, it's still moving at a good pace."

Reuters contributed to this report.

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