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Friday, 29 August 2008 11:25

Dell records boom growth in Asia Pac and Japan

PC maker Dell has posted strong second quarter results, while claiming particularly healthy growth in the Asia Pacific and Japan markets. What's more the recently troubled company claims to be easily outperforming its main competitors in the region.

During 2006 and 2007, Dell lost market share, with HP taking over as the world's leading PC vendor. Things started to improve in 2008, and the latest results could be seen as confirmation that the measures put in place by the company are having the desired effect.

Dell has stated that its primary goal is to outgrow the industry, with increased profitability seen as a longer-term goal.

Dell's second-quarter results are "extremely encouraging," according to Steve Felice, president of the company's Asia Pacific and Japan operation. While the company as a whole experienced revenue growth of 11 percent, the regional figure was 25 percent.

While the company saw "healthy growth nearly everywhere" across the region, the highlights were India and China.

Growth in India dropped from 89 percent to 63 percent, but that's still an impressive figure. Growth was "very healthy" in the corporate and government, small and medium business, and consumer markets.

Dell's consumer business in India is still quite small, but 500 percent year-on-year growth is nothing to be sneezed at.

Revenue growth was 33 percent in China, and around 30 percent in the ASEAN nations, said Felice.

How is Dell going compared with its major rivals? See page two.

Dell APJ is also outperforming its two main competitors (unnamed, but according to IDV figures they would be Lenovo and HP) which Felice said managed 16-17 percent revenue growth in the region.

He claimed Dell's market share gain was between three and four times that of the two competitors, across desktops, notebooks and servers.

Felice did sound a "cautionary" note on the subject of inflation. Noting that inflation is running at 11 percent in India, is rising in Japan and that there are inflationary pressures in China, he said this could lead to reduced spending.

However, he said his overall level of optimism hadn't changed, though he considers it "prudent" to keep watch over inflation. That said, he still believes that the PC industry will enjoy double-digit growth in the region, and that Dell can beat the average growth rate.

Dell is also enjoying success in its more established markets in the APJ region. In Australia, where the company has been operating since the early 1990s, the quarterly results showed 19 percent revenue gains on a 12 percent uplift in unit sales, along with "solid share gains," said Felice.

The Australian operation is "growing well ahead of industry growth rates," he said. Sales to SMEs and corporates - including government panel contracts - were going well. "The execution there is excellent," Felice added.

Regional prospects were good, he claimed, with the potential for further growth over the next several years.

Please turn to page three for a look at Dell's global picture.

Things aren't looking so rosy on a global basis. Worldwide, Dell reported a 17 percent drop in profitability for the quarter.

"We are making progress in improving productivity and reducing costs," said CFO Brian Gladden.

"Strategic actions to accelerate growth in certain areas of our business affected gross margins this quarter and there will be some non-linearity in the improvements in our operating income margins as we rebalance our portfolio, make cost improvements and drive growth."

Those cost reductions include the loss of 8500 jobs, with another 400 set to go during the current quarter. Your cheap computer is someone else's severance notice.

As for founder, chairman and CEO Michael Dell, he said "We are positioning Dell to win in a new era of global IT spending."

"We have our most competitive product portfolio ever – whether for digital nomads or hyper-scaled data centers. Our growth at a multiple of the industry across all major product categories for the second consecutive quarter affirms we are on track with our five key business priorities – notebooks, consumer, enterprise, SMB and emerging countries."

In related news, Dell this week announced a new series of Vostro notebooks and desktops designed for selected countries in Asia, Africa, Europe and Latin America where low cost is a priority.

"Within the world's emerging economies millions of new businesses are demanding just the technology they need, at the prices they can afford, from a vendor they can trust... we answer that need by introducing new products that join our existing Vostro product line,” said Felice.

The new systems are based on Intel Celeron, Pentium, Atom and Core 2 Duo CPUs, and are variously offered with Ubuntu Linux and Windows Vista. They deliver "industry leading prices for the features you are getting," Felice claimed.

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Stephen Withers

Stephen Withers is one of Australia¹s most experienced IT journalists, having begun his career in the days of 8-bit 'microcomputers'. He covers the gamut from gadgets to enterprise systems. In previous lives he has been an academic, a systems programmer, an IT support manager, and an online services manager. Stephen holds an honours degree in Management Sciences and a PhD in Industrial and Business Studies.

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