Direct selling PC vendor Dell has surpassed Wall Street expectations again with fourth quarter profits up 50 per cent on last year.
The company even accelerated sales in Japan and other Asia-Pacific countries despite the currency crises in the region, which have hit many other PC makers' results.
Net income rose to $285 million for the quarter, from $188 million last year. In Europe, sales climbed by 61 per cent, ahead of the US, on 51 per cent - but behind the Asia-Pacific region, where sales leapt by 79 per cent.
Consumer PC sales also nearly doubled in 1997, even though the firm does not manufacture a sub-$1,000 model like many of its rivals including fellow direct seller Gateway.
However, despite the figures, analysts have some concerns over Dell?s enterprise NT business. Hannah Kirkman, an analyst with the Yankee Group, warned: ?The issue for Dell is enterprise NT because they?re in a low end and saturated market. Compaq, though, has tried to position itself as a prime supplier of NT in the enterprise market with the acquisition of Tandem and Digital.?
Compaq?s Peter Blampied, commercial business unit manager, agreed, adding: ?How they will develop themselves in the enterprise area is crucial. Dell really has no presence in this market and the only way for them to get any would be to invest heavily in service and support."
He added: "They can?t compete on price and technology because the customer demands mission critical applications which Dell can?t support. Perhaps they should look to buy someone like Tandem or Digital.?
Peter Hubbard, managing director for public sector business at Dell, responded: ?For us, to develop a partnership with somebody doesn?t mean you have to buy them. The value that we bring to any partnership is our direct business model, which our partners can benefit from.?
He continued: ?We are the fastest growing server company. We currently have a number two position as server supplier in the UK, according to IDC. We currently have 12.8 per cent of the market, having come from 8.7 per cent for the same period last year. That?s a growth of 50 per cent, and we continue to grow, and continue to sell into corporate enterprises.?
Fujitsu's PC marketing manager Frank O?Brian was not disturbed by the strong results from his rival. ?They are impressive results but not surprising. They show that the strong players are getting stronger and the weak ones are getting weaker. Dell?s turnover business figure takes into consideration resellers. They may look impressive but they aren?t half as good as the Compaq?s. I?m certainly not troubled by them. We?re having absolutely no problem working with the channel and competing with Dell."
He even professed to be unfazed by Dell's performance in Fujitsu's home region, Asia-Pacific. Despite the 79 per cent increase in sales, as a percentage of total sales by geographic region, it has slipped from seven to six per cent, he pointed out.
He commented: ?I don?t think Dell are doing that well in Asia-Pacific. They?ve got a small amount of business there which they?ve grown from a small base. But the challenge is to grow from a big base. They are nowhere in Germany, and that?s the biggest market in Europe.?
Industry market research firms predict PC sales will rise by 15-20 per cent each year for the next few years.
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