John, article uses very bad math:
...Even if it generates near-peak profit margins, to return 10.4% a year to shareholders Dell will need sales of $118 billion in seven years. That's more than 80% of the global PC market; today Dell's market share is 16%...
in seven years the worldwide PC market is expected to grow at an annualized rate of 6%, notwithstanding that India's PC market grew by 50% last year (same expectations this year) and China's by 40% (China and India combined constitute nearly 40% of the world's total population, and 50% of its growth). this "6%" growth is consistent with the growth in the overall world population, especially considering growth in industrialized nations; it actually underweights the worldwide population growth.
if the current world market is $145 billion, a 6% growth per annum, in seven years will yeild $220 billion market. $118 billion in sales is 54%.
their "$145 billion" figure, however, does not constitute many accessories to the PCs, including printers, services, enterprise software and total enterprise systems. so, in reality the worldwide total market for PC's and peripherals is much higher, is over $250 billion. if you use $250 billion instead of the $145 billion figure, and a 6% growth rate, in seven years the total market will be over $380 billion.
$118 billion as a percent of $380 billion is but 31%, certainly a more realistic figure. i guess the author figures we all buy into everything written through the press? why would he make such poor assumptions for his article? |
