Dell Computer is serious about its push to expand beyond the PC market by selling storage devices, networking products, servers, printers and professional services to companies, the company's chairman and CEO, Michael Dell, said last week.
By moving into these new markets, Dell is already snatching market share away from traditional enterprise vendors with its trademark lower costs and direct sales model, he said.
"Over the past five to 10 years, Dell has made a lot of progress in markets beyond desktop computing," he said.
In fact, most of Dell's profits come from non-desktop computing markets, Dell said. In the past quarter, for example, Dell shipped more than 250 terabytes of storage per day, he said. The company also sees big opportunities in networking, the traditional stomping ground of Cisco Systems, and in printers, where it faces HP.
Moreover, its overall services business now contributes 10 per cent of total revenue, and the professional services segment of this business, which involves design and implementation of systems for companies, is growing extremely fast, he said. The company is investing heavily in growing its professional services business, where it sees extremely high prices that can be lowered. There is no reason why implementing a storage area network has to cost as much as it does today, Dell said. Last year, the company had 2,000 professional services engagements.
Dell's strategy in the services market exemplifies its overall strategy for entering new markets: it identifies a mature market with technology that has been standardised and then tries to underprice competitors by finding more efficient ways of manufacturing, packaging, selling and distributing the products and services. That is certainly going to be the strategy in the printer market, in which Dell is partnering with Lexmark International to bring Dell-branded printers to market next year. Dell already resells printers from Lexmark and other printer makers.
The company also plans to enter the handheld PC market, although Dell didn't provide more details about when and how it plans to do that.
Dell also pointed out that while many IT vendors are struggling, his company is on track to post a revenue increase of 22 per cent and an operating income increase of 36 per cent in the current quarter, compared with the same quarter last year.