Dell looks outside US for future growth

Dell looks outside US for future growth

INTERNATIONAL markets such as Europe and Asia-Pacific will allow Dell to continue its rapid growth as the company closes in on its goal of US$60 billion in revenue.

Dell is ready to fight market share leader Hewlett-Packard Co. (HP) outside of the US, says Paul Bell, senior vice president for Dell's business in Europe, the Middle East and Africa (EMEA). Dell has taken market share from HP over the last year, and believes it can continue to take share with its emphasis on its direct model, Bell says.

Dell is experiencing faster growth in Asia-Pacific and Japan (AJP) than in any other region of the world, says Bill Amelio, senior vice president for AJP. AJP now represents 10% of Dell's overall revenue, and EMEA makes up about 20 percent of Dell's revenue for its 2004 fiscal year, ended Jan. 30, 2004.

Dell set a goal in 2002 of doubling its revenue to $60 billion over a period of just a few years. The Round Rock, Texas, company has aggressively entered consumer markets in EMEA and AJP to help spur that growth, and now has improved revenue in EMEA by 23% over last year and improved AJP revenue by 25% compared to fiscal 2003.

Corporate customers still account for the majority of Dell's international business, and the company is starting to see those customers in EMEA spend more on technology after a flat year, Bell says.

China holds the single greatest opportunity for Dell now, Amelio said. Only about 3% of China's 1.3 billion people have a PC, and around 6% have access to the Internet, he said.

With economic conditions in China improving every day and disposable incomes rising, Dell has a real opportunity to make inroads against local PC vendors such as Legend Group and Founder Group, Amelio says.

One potential road block holding up rapid expansion is the low average selling prices of PCs in China, making it hard for companies to sustain healthy profit margins. Dell's initial focus is to gain market share in the areas with higher average selling prices, then work its way down the chain, Amelio says.

Notebooks continue to be the fastest growing segment of the PC market around the world, but China's insistence on implementing a different standard for wireless security might also cause problems for international vendors trying to gain share in the country, Amelio says. China is requiring that all wireless LAN (WLAN) chips sold in the country support the WAPI (WLAN Authentication and Privacy Infrastructure) standard, which is different from the security protocol used in the 802.11 standard.

Dell is evaluating its options on how it will handle that standard, Amelio says.

Dell now has more employees outside the US than it does inside the country, according to its annual report. Out of 46,000 employees, about 23,800 were located in countries other than the US.

The company has set up business units in several areas of AJP rather than entering the market with joint ventures, Amelio says. Dell now has a design center in Shanghai, houses its back-office operations for Japan and South Korea in China, and has set up a customer support facility in Malaysia, he says.

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