Dell Computer Corp told Wall Street analysts that it sees no significant changes in demand for personal computers, despite what others in the industry may be saying. Company executives, speaking at a semi-annual strategy update in New York, said the direct seller of PCs expects to see overall industry growth this year of 14% to 15% and promised that Dell’s own growth would continue to be at a multiple of the market.
Analysts and investors have been somewhat skittish recently about prospects for the Round Rock, Texas-based company as it appeared that the phenomenal growth which it has enjoyed over the past several years was finally grinding to halt. But chief financial officer Tom Meredith pledged quarterly growth and said the fun will continue for Dell shareholders. Even if the company isn’t growing at the 50% rate it had been, the company appears content with projections of growth in the 35% to 40% range.
Dell said it will deliver on its promises, even as PC pricing pressure intensifies, by generating more revenues from the sale of peripherals, financing arrangements and services. The company now derives 38% of its total revenue from non-hardware areas of its business. Paul Bell, vice president of Dell’s consumer and small business unit, told the gathering that while Dell will now sell machines at increasingly lower prices, it will do so profitably, thanks to the benefits of the company’s direct sales model. Last month Dell introduced its first PC priced at $999, having previously avoided the booming sub-$1,000 market.
When asked about the nature of the company’s relationship with IBM Corp – following their $16bn deal in which IBM will supply components to Dell – Meredith said, I can’t believe our relationship won’t be enhanced over time. He stopped short, however, of commenting directly on suggestions that Dell will eventually take over IBM’s money-losing PC business, with Big Blue relegated to supplying parts. In its annual report, IBM revealed that its PC operations lost nearly $1bn last year on $12bn in sales.
