August 22, 2012

Dell Product Sales Decline As Customers Wait For New OS

John Neumann for - Your Universe Online

Texas-based PC maker Dell, once the world´s top PC maker is seeing its sales numbers falter as customers hold off on PC purchases ahead of the launch of Microsoft´s Windows 8 software. The once mighty Dell is also struggling to defend its market share against Asian rivals such as Acer and Lenovo, and the increasing adoption of mobile devices over traditional PC products.

Dell cut its fiscal year outlook given “the uncertain economic environment, competitive dynamics and soft consumer business,” but remained relatively upbeat about its enterprise unit, writes Larry Dignan for ZDnet. Specifically, Dell mentioned its third quarter sales will be down 2 to 5% from second quarter levels.

Chief Executive Michael Dell´s self-named company has not been sitting idly by however. The company is in the midst of a turnaround, juggling acquisitions to bolster growth with the need to fatten margins by trimming expenses even as global tech spending appears to be slipping.

This spring it warned that global tech spending is weakening faster than anticipated, reports Jim Finkle for Reuters. “People had already expected them to take down numbers, but I think the level to which they are taking down numbers is pretty severe compared to expectations,” said Cross Research analyst Shannon Cross.

Dell Chief Financial Officer Brian Gladden said in an interview the company tempered its outlook for the third quarter partly because it expects distributors to hold off on buying new computers before the late-October release of the latest version of Microsoft´s Windows operating system.

“The revenue deterioration we saw in the quarter was clearly above anything we expected,” he told analysts on a call.

Dell is trying to expand further into enterprise computing to stave off slowing consumer numbers. However that market runs directly against larger rival Hewlett Packard.

This week Dell announced that it had hired ex-HP networking chief Marius Haas to head up its enterprise solutions division and help hasten its push into global services, confirming an earlier Reuters report.

The upcoming redesigned Windows, which Dell and other PC makers are eagerly anticipating, will foster new hardware with touchscreen devices and internet-based computing in mind.

Analysts say it may give PC makers like Dell, HP and Lenovo a chance to win back market share lost to mobile tablets. In June, Microsoft took the wraps off the “Surface” tablet computer, which some analysts see as an attempt to demonstrate the effectiveness of Windows as a mobile platform.

Michael Dell cautioned that it could take a while for sales of the device to ramp up, saying that he has heard estimates from Microsoft that the new devices are likely to account for just 1 to 2 percent of total PC units shipped through the middle of next year.