Dell sticks to its PC hardware guns

Dell sticks to its PC hardware guns

The head of Dell Computer said his company is changing to address corporate customers' needs with beefed-up support, better system manageability and electronic-business consulting services, during an interview at the GartnerGroup Symposium/IT Expo here on Monday.

At the same time, Dell chairman and CEO Michael Dell made it clear the company's bread and butter is expanding hardware market share at the expense of competitors.

To help meet the needs of enterprise customers, Dell will be investing to expand its $US2 billion services business and will continue to sign up with partners such as IBM and Unisys.

"Services are not a substitute for our core business," Dell said, but the company will expand the number of application solution centres -- where customers can test out how to install and run enterprise resource planning applications or storage at Dell sites -- to within the next six months.

"There has been a phenomenon of companies getting into the services business to get out of the hardware business, but we view things very differently. We are very profitable in our hardware business, unlike [our competitors]," Dell said.

"We see a large adjacent opportunity [in services], even in more Web hosting and e-business consulting."

Dell also hopes to bring the direct model of selling PCs to support and service, through which customers can get phone and Internet support. The demand for services that require large field service organisations is decreasing, he noted.

"There's an intersection of user knowledge and our ability to supply services. This stuff used to be complicated, and it still is, but we have fewer customers that need us to hold their hand to install an NT Exchange server," Dell said.

On the product end, Dell's next generation of Dell Plus servers will significantly reduce the time to do and qualify new software images, which will bring more consistency to corporate systems, Dell said.

A long-time vendor of Wintel wares, Dell said that the company is exploring its options, both in software and hardware.

"We're looking more and more closely at Unix, particularly as Intel 64 comes into being. Linux is an interesting business, but it's nothing like what Windows and Windows 2000 will be," Dell said.

Dell was generally bullish on the company's future, brushing off suggestions from Gartner analysts that corporate PC replacement rates are slowing down, which could hurt Dell financially. He noted broadband, wireless and other new features will continue to drive sales in the business and consumer markets.

"The big wild card is pricing for LCD screens. The gap [between the price of a desktop and notebook PC] hasn't been this big in years. If that comes down, notebooks could be one third of the market" for PC purchases three to four years from now, he said.

Dell cut a less overtly aggressive figure than last year at GartnerGroup's conference when he said that Apple interim CEO Steve Jobs should liquidate Apple and sell its shares back to shareholders.

He said the biggest competitive threat is not from established hardware providers, because "the economics of what Dell does have not been changed". Rather, the big threat is from highly financed pure-Web companies that may not turn a profit in the short term, Dell said.

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