Pat,
50% market share, that's a lot of PC's !!!!!
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Monday October 11 4:46 PM ET
Dell Predicts Larger Market Share
By Brad Liston
ORLANDO, Fla. (Reuters) - Dell Computer Corp (Nasdaq:DELL - news). Chairman Michael Dell Monday said he expects the market share of the world's No. 2 personal computer maker doubling or quadrupling over the coming years.
While Dell declined to set a specific timeframe on his goal, the company has grown at double or triple the rate of the industry for several years -- allowing it to recently surpass IBM -- and is now chasing Compaq Computer Corp (NYSE:CPQ - news)., the world's No. 1 PC maker.
Dell also told a technology conference here hosted by the Gartner Group that the company's recent emphasis on supplying more sophisticated technical services does not mean it is backing off its emphasis on direct sales of hardware.
This year he said he expected the company to add about $8 billion in new revenue, for a total of about $26 billion for the year. But he said the services segment would continue to grow faster than the company as a whole.
``There has been a phenomenon in our industry that when companies sort of go into the services business that means that they are getting out of the hardware business,' Dell said.
``We are very profitable in our core hardware business. We also only have 11 percent market share. I think we can grow that to 25 or perhaps 50 percent going out a number of years.'
Dell did not take questions from reporters after his speech. Recent industry global market share data showed Compaq with 15 percent, Dell at 11 percent, IBM holding 9 percent and No. 4 ranked Hewlett Packard Co. at 7 percent. The rest of the market is extremely fragmented among smaller players.
Last month Dell awarded a $6 billion contract to IBM for its IBM Global Services to service Dell customers, adding that to earlier deals with Getronics NV's Wang Global unit and Unisys Corp (NYSE:UIS - news).
Dell said Dell would expand its own services as well, mostly through online, electronic mail and telephone support as opposed to on-site visits.
``We don't think the answer is to go out and employ our own army of 50,000 people,' Dell said. He said the company's service business represented about $2 billion of its $18 billion annual sales last year.
Dell predicted a strong future for PC sales in general and no change in the basic replacement dynamic in which most customers replace computers every three years. He said hardware sales will be fueled by falling prices and increased demand for bandwidth, which increases a computer's ability to broadcast sound and video directly from the Internet.
Like some of its competitors, Dell recently began offering $400 rebates to computer buyers who sign up for a three-year Internet access subscription at $21.95 per month. Like other companies, Dell is making money from the deal, but the company founder said the demand for bandwidth beyond the standard 56 kilobit modem access may make that a bad deal.
``I think you've got a real problem in about 18 months' when the demand for broadband Internet access starts to take off,' Dell said.
He also said that as Internet access expands to such items as mobile telephones and personal organizers, the demand for PCs will remain strong. On the popular Palm Pilot, he said the biggest and most important button ``is the one that allows it to synchronize with the PC.' |
