Dell Computer Corp’s business plan now extends far beyond the boxes it shifts. Its key opportunities will be penetration of market segments it currently does not dominate, together with global expansion and technology leadership, it said on a Merrill Lynch & Co call. Extended services, support and e-commerce will be required at all levels.
Pointing to overseas markets, Dell, which currently does 37% of its business internationally, wants to raise that to 50% over time, though it doesn’t know how long it will take. Where 3.5% of US GDP is spent on IT, the figure is lower in other countries although business and political leaders of other key economies including Japan and the UK have recently been encouraging corporations and consumers to spend more on IT. In Japan home PC purchases can even be written off against taxes. Dell estimates it now has 16% of the big four vendors’ (IBM, HP, Compaq, Dell) 33% share of the overseas PC market, up from 2% in 1990, pointing to a significant opportunity to add share. Its 65-strong global customer program is now bringing in some $1.82bn revenue.
It also wants to do be doing 50% of its revenue from web site sales by next year. It’s been doing $14m a day, or $5bn a year. Then we will think about 100% and what it takes to get there, Dell says, expecting it should be able to get very close to this mark. It believes it’s looking at a $23bn addressable PC market, plus a $56bn enhanced services market for services such as the internet, and $160bn professional services market beyond that.
The consumer business is worth $3bn and unit ships have grown 80% in two years. It expects worldwide consumer unit growth to match 1998’s 80%. Breaking it out, it should see greater than 70% growth in medium, large businesses and education sales but less than 30% in home and small business markets. The sub-$1,000 PC market will happen and Dell will play in it, it says. It’s set to expand the services it offers to those customers and has hinted at a creating a Dell-branded internet connection. It estimates there are two million users of Windows 2000 beta.
