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Dell Sees Internet Sales Rising June 1, 1999
Business News Archives
Dell Computer Corp said it aimed to see direct sales of its personal computers over the Internet to contribute up to 50 percent of total revenue in the next year or so compared with the current 30 percent.
"Our business worldwide is about 30 percent on the Internet now for Dell," vice chairman Kevin Rollins told Reuters in an interview. "We have a goal to reach 50 percent within the next year or so."
"We will continue to grow until we get to that point. Then we will set a new goal of probably 75 percent of our business (via the Internet)," Rollins said.
Last month Dell reported a 42 percent rise in profit to US$434 million in the first quarter. Revenue grew 41 percent to US$5.5 billion.
Dell said its sales of products and services via www.dell.com surpassed US$18 million per day during the first quarter of 1999, translating into a US$6.5 billion annual rate. "On the e-commerce side, it will be very, very large. Our growth rate can be in the US$20 billion to US$40 billion (range) over the next couple of years," Rollins said.
Dell would spend about US$500 million on product development this year, in particular developing systems for use with the Internet, Rollins said.
About two percent of the company's revenue goes to research and development, and two percent to information technology, and most of the spending is Internet-related, he added.
Rollins said the average selling price of its personal computers fell two percent in the first quarter of 1999 from the fourth quarter of 1998.
The average selling price was down by seven percent in the first quarter of 1999 compared with the same period last year due to a drop in component prices, Rollins said. He said the market average price was down some 12 to 13 percent.
Rollins said he expected prices to decline at a much slower rate this year. "I don't expect to see that kind of average selling price erosion this year," he said.
He said PC companies might lose money if prices continued to decline significantly.
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