Dell Shares : Notebooks

Launching Windows 7 – Will it generate an upgrade cycle?

DELL-Kristy H — Fri, 16 Oct 2009 15:33:00 GMT

As we meet with investors, we have been getting a lot of questions about a pending corporate upgrade cycle and whether Windows 7 will be a catalyst for PC demand.

First, let me say that we're very excited about the Windows 7 launch next week. Dell is one of Microsoft's biggest OEM partners, and due to a collaborative engineering effort that extends over the past three years, we really feel customers will reap the benefits from upgrading to Win7. Windows 7 has some very compelling features ranging from better applications and drivers to faster boot times and quick online capabilities.

So why Windows 7?

Beginning with boot time - it's fast. Windows 7 uses less memory to boot the OS than Vista. Microsoft removed unnecessary services and drivers from automatically loading, which reduces the boot time and the OS footprint occupied in memory. The user interface also has several cool new features. Jump lists or pinned applications facilitate opening recently viewed items, such as files, folders, or websites in a more organized fashion. And the snap feature allows you to snap two windows to the side of the screen and compare them side by side with ease.

Windows 7 makes it easier than ever to go mobile. Improved wireless connectivity results in less time to locate and connect to a network. And with location aware printing in the Professional and Ultimate versions of Windows 7, you no longer have to manually switch printers when moving from home to work or network to network. In addition, it can also run in XP mode which is great for customers that need a way to deal with legacy applications that aren't compatible with Vista or Windows 7. Clearly, these are just a few of the cool features you will find, so check out more details in our Direct2Dell blog.

As Michael recently stated regarding the use of Windows 7, "You will love your PC again".

What about a corporate PC upgrade cycle?

In commercial accounts, increases in information technology spending are most strongly correlated with improvements in corporate profitability and that will be the key driver of a commercial refresh. Specific to Win7, we have only seen about 30% of our commercial customers adopt Vista with the rest staying on older operating systems. With a weak economy, the installed base has increased to about five years for desktops and 3-4 years for notebooks. So many of our customers are working with older machines and running an operating system that is almost 8 years old. This coupled with the fact that new PCs are faster, considerably more energy efficient, and have much better graphics capabilities make for a compelling upgrade.

We're also working with Microsoft on the launch of Windows 7 next week, and on the upcoming launch of Office 2010. Everything we see right now from the direct conversations with customers to surveys with CIOs tell us an upgrade cycle is forthcoming and likely in 2010 - helped by Win7 but really driven by an improving economy.

Review of Dell's 2009 Analyst Meeting

Robert L Williams — Tue, 14 Jul 2009 19:00:00 GMT

Dell Equity Analyst Meeting

Today more than 200 participants, including analysts and investors, joined us in Austin for Dell's Analyst meeting. There were also a record breaking number of webcast attendees for this meeting, where we broke our record of 400, rising to nearly 500 participants. This meeting was an opportunity to hear directly from Dell's senior leadership on our near-term operating agenda and long-term strategy and address questions or concerns. The presentations from this meeting are available for viewing online,

This year, the meeting and briefings took place the same day. Dell executives discussed the company's strategy and operating agenda along with a financial overview and update on its four customer segments.

We are competing in a rapidly changing environment. As a result, we are improving our core business performance while expanding and extending across a broader set of customer solutions. Key messages delivered today were Dell's differentiated view of how to win in enterprise, our strategic mission "to provide disruptively great value to our customers", and that both these items will be realized through a combination of internal investments, partnerships and inorganic growth.

The meeting was opened by Michael Dell, Chairman of the Board and CEO, where he discussed Dell's key assets, view on the enterprise, and long-term priorities. Michael noted that Dell has a strong presence and currently holds #1 or #2 share position in most key segments. He also covered strategic priorities to deliver operating income and cash flow growth as well as the requirements needed to win longer-term.

Brian Gladden, CFO, followed and built on striking the optimal balance between liquidity, profitability and growth. Brian reviewed Dell's operating agenda, gave an update on the solid progress on $4B cost reductions, and provided a long-term value creation framework that articulated Dell's vision for revenue growth, profitability and cash flow generation. He also stated that Dell is well positioned to benefit from an economic recovery and will continue to provide strong liquidity.

Steve Schuckenbrock, President of Large Enterprise, walked us through our higher-value & higher-margin enterprise vision which addresses innovation and virtualization in next-generation data centers vs. our competitors' full-stack approach. He also reviewed how Dell is delivering steady growth in its core business while powering enterprise efficiency through innovation without legacy. For example, we approach services very differently from our competitors. We believe services should be customizable, a la carte, and available remotely. We let customers choose which services they want and when they want them. And we provide solutions where consultants are available - but not required.

Paul Bell, President of Public Sector business, addressed how Dell is aligning its global organization for balanced geographic expansion via vertical solutions designed for three unique customer bases -Education, Government, and Healthcare. Paul mentioned the challenges in this segment due to the macro environment, but also highlighted opportunities that exist internationally as well as those related to stimulus funds. Requirements needed to win in the Public sector include deep expertise in the sector-specific challenges, solutions investments, technology leadership, and solid partnerships.

Steve Felice, President of Small & Medium Business, presented Dell's plans to lead in the SMB space through innovative solutions and its go-to-market strategy. Steve reviewed the varied needs across the customer base of Small Businesses and Medium Businesses as well as regional opportunities to grow the business. He highlighted the solutions and product offerings that will help drive growth in each of these areas along with the benefits offered through SMB's go-to-market strategy. Having a multi-channel strategy will enable Dell to expand presence in under-represented geographies and drive incremental growth in enterprises and solutions.

Ron Garriques, President of Dell's Consumer Group, walked through consumer's brand architecture, its multi-channel customer portfolio and how it's bringing a disruptive approach to PCs. Dell grew to 33,000 retail stores globally in two years. Clearly, there is a lot of opportunity to continue to grow in this retail space. Ron reviewed Consumer's plan to grow faster than the industry through aggressively managing costs to reflect the multi-channel infrastructure, expanding global presence, and offering competitive products. He also reviewed plans to reinvigorate Dell.com to create a destination for all customers.

If you haven't already seen the presentations, I encourage you to watch a replay of them here.

As always, we welcome any questions or comments.

-Rob

Comments on the Netbook Effect

Robert L Williams — Wed, 29 Apr 2009 18:52:00 GMT

The netbook is a product category that has received considerable attention over the past several months from the media and investment community, so I wanted to share Dell's point of view on it. We see this relatively new product as another category of the notebook market and one that is growing rapidly. In Dell's case, the Inspiron Mini line is an excellent way for us to continue down the path of expanding the number of product platforms designed around specific customer needs and cost points. As for the opportunity, Wall Street analysts estimate netbooks may reach 20 to 30 million units in calendar 2009 while IDC expects total notebook units for 2009 to be approximately 148 million on a worldwide basis. Thus, netbooks are certainly a meaningful and growing part of the overall notebook market with the potential to represent 13 to 20% of total notebook units shipped worldwide this year. Revenue and profit share will be lower given the lower average selling prices for netbooks.

Dell entered this category last fall and currently offers three products in the "netbook" segment in 9, 10 and 12-inch screen sizes. Consistent with Dell's overall consumer approach to differentiate based on industrial design as well as specific functionality in each price point, the Mini line-up is stylish and packed with solid mobility features including integrated 3G mobile broadband connectivity. Dell has also established key cellular broadband partnerships in North America and Western Europe and recently announced a deal in which China Mobile will offer 3G broadband on the Mini 10 inch netbook in China.

We view netbooks as incremental to conventional notebooks with some differences in usage by mature and emerging geographies. In mature markets, we believe netbooks will principally function as secondary devices. People looking for basic email, web access and social networking functions may favor the small screen sizes, keyboards and lower power footprint. They also serve as an excellent travel companion device for those who are highly mobile and looking for a smaller form factor on the road. However, a traditional notebook is generally a better option for consumers looking to perform functions such as photo and video editing or use productivity software applications such as Office. In emerging markets we believe that many first-time and value conscious users may be attracted to netbooks as they offer basic functionality at an attractive price point. Netbook usage may find its way into other areas besides consumer, such as schools and education. Though this may act to reduce overall hardware average selling prices, it also presents an excellent opportunity to increase the addressable industry opportunity and raise margins through attached services, software, etc.

Overall, there are different usage models and applications that will drive people towards different sized devices and technologies. This is a quickly evolving space that will see the introduction of more powerful and more efficient processors from the likes of Intel, so we will watch this play out. Regardless of where these technology improvements take us, Dell's direct relationships with its customers, allow us to deliver what customers want and take them where they want to go with the proper features, whether it is mobile broadband, keyboard configuration, screen size, etc. The growth in this space looks to outpace that of traditional notebooks over the next several years, and Dell will be a part of that growth.

Jeff Clarke, Vice Chairman, Technology and Operations, Discusses Progress on $4B Cost Initiative

Robert L Williams — Fri, 17 Apr 2009 14:50:00 GMT

I recently sat down with Jeff Clarke, Vice Chairman, Technology and Operations, to discuss a range of topics that have received investor attention including:

Declining Client ASPs in the commercial customer business
Desktop and mobility virtualization
Progress on our $4 billion cost initiative
Optimization of our global manufacturing and logistics network
What we are going to do with the savings we realize from some of these initiatives

As always, I look forward to your questions and comments!

(Please visit the site to view this media)

V-Log with Ron Garriques discussing Dell’s Consumer Business and Product Portfolio

Robert L Williams — Mon, 26 Jan 2009 17:33:00 GMT

Thanks for joining us on Dell Shares. Coming off an exciting Consumer Electronics Show, where Dell recently announced a variety of products including the new Studio XPS laptops, XPS 625, and preview of G-Series monitors, there is a significant buzz surrounding the consumer business. I recently spoke with Ron Garriques, President of Dell Global Consumer, to discuss some of the exciting new products in Dell’s consumer portfolio and to gain some insight with respect to the customer sets that are addressed by each of them. Ron’s walks us through the different Dell brands, customer usage models, and growing emphasis on industrial design in the company. In this conversation, I ask Ron about Dell’s expanding number of platforms, retail channel strategy, convergence trends in mobility and thoughts on the evolution of the business and P&L.

I invite you to watch the v-log. We will respond to your questions and comments posted on this blog site as well as via email and over the phone. We look forward to hearing from you!

(Please visit the site to view this media)

2Q Earnings – Optimizing for Growth, Profit and Cash Flow Over Time

Robert L Williams — Thu, 28 Aug 2008 18:01:00 GMT

All comparisons are year-over-year unless otherwise noted. Industry growth rates exclude Dell.

We announced Q2 results today. Revenue was up 11% to $16.4 billion on 19% unit growth. EPS were down 6% to $0.31 per share and cash from operations was $1.1 billion and $3.4 billion on a trailing four quarters basis. We strongly encourage investors to read the full press release and earnings presentation; and listen to a replay of our conference call that can be found on the investor relations web site after the earnings call.

This quarter we enhanced our competitiveness by introducing a more robust enterprise solutions portfolio, a new commercial notebook line and expanding our product portfolio in consumer, including our new Studio brand of desktops and notebooks. Again this quarter we saw share gains in all major product categories and regions including rapid growth in BRIC and emerging countries. Global Consumer revenues grew 28% on unit growth of 53%, and BRIC revenues were up 46% on unit growth of 41%.

Our gross margins were 17.2% of revenue this quarter. In EMEA we took strategic pricing actions ahead of cost improvements. In EMEA we also increased the deferral of service revenue which was driven by some changes in how we market our service offerings in the region. While this had a negative impact on reported profit in the quarter, it was neutral to cash and the revenue and profit will be recognized in future periods. Gross margins were also impacted by the retail mix shift in our consumer business as we continue to expand our global footprint.

We also saw an improvement in opex of 70 basis points sequentially and 160 basis points year-over-year, reflecting some of the progress we've made towards our $3 billion in cost initiatives.

We are balancing growth & profitability -- optimizing for growth, profit and cash flow over time. Re-igniting demand can be an imprecise process, we believe we are building momentum and cost improvements should be more evident in the back half of this year -- which is what we said in April. Our strategy to grow is fueled by confidence in our ability to harvest the cost improvements over the long-term. This three year time horizon allows us to take a "long view" of our business and maximize growth and profitability in that time frame.

There is a clear line of sight to $3B of annualized cost savings. We are targeting three key areas of total cost; in order of size they are: product cost & materials, opex, and manufacturing and logistics. We have detailed plans for savings, actions, and executive ownership with visibility out to the full three years, including bi-weekly interlock meetings now chaired by our CFO, Brian Gladden. And, we feel that we have sufficient room to improve operating income as we improve gross margins and opex.

Finally, scale is important. Over the next four years global IT spending will approach $1.5 trillion. Scale here is important because $1 of hardware spend pulls about $2 in additional spending -- this is one reason why unit growth matters for Dell. In this regard, we are pleased with our broad based growth in the global commercial business. In the past year, this business generated nearly $53 billion in revenue and $3.7 billion in operating income. And we have been the #1 provider of commercial systems worldwide for eight years running.

Beyond delivering hardware, today we are partnering with customers to solve pressing issues and deliver more end-to-end solutions. Our sales, onsite systems engineering, high-availability database, and ProSupport service teams are helping customers manage everything from starting up and consolidating data centers to delivering flexible computing platforms running off of virtualized servers and storage.

This growth in our enterprise portfolio demonstrates that customers are increasingly confident in our ability to design and support complete solutions. As a result, they are expressing interest in a deeper direct relationship -- one that we hope to foster for years to come.

Dell E-Series Notebook Launch

Lynn Tyson — Tue, 12 Aug 2008 13:19:00 GMT

Today we introduced our new, business Latitude E-Series notebook line. This is the largest product rollout in our history. You may remember that one of our five strategic priorities is focused on notebooks. This launch is another milestone in notebooks as we move further down the path of expanding our number of products, designing around specific cost points and customer needs, while simplifying the overall experience for our customers.

As background, Dell has long been a leader in the commercial notebook space, currently holding 32.9% and 19.2% share positions respectively in the US and worldwide according to IDC. Overall our corporate business is a $52 billion business based on the past four quarters and Dell has sold over 50 million Latitude notebooks since the product's introduction in 1994. The importance of our notebook priority is underscored by a number of trends. Notebooks are expected to outsell desktops by seven times during the course of 2008, growing to a $137 billion opportunity by year-end. This increase will be fueled by explosive growth in the emerging countries, where Brazil, Russia and China all grew at over two times the industry in the past year. In fact, many new users are simply skipping desktops and adopting notebooks as their first PC.

Size isn't the only important dynamic defining the notebook industry, as notebook replacement cycles are typically faster than desktops and carry traditionally higher average selling prices and margins.

We typically undertake a wholesale refresh of our business products every five to six years to provide consistency and longevity for our corporate customers. This time around we have made significant changes from the typical corporate product rollout. We have listened to our customers whether they are road warriors, typical office users, or those with specialty and advanced performance needs. Based on that input, we have completely revamped the line, differentiating ourselves from the competition in terms of design, performance and portfolio breadth.

Some of the key product highlights, which set Dell apart from the competition with this launch, are:

A completely new look as we have made use of advanced materials, more aggressive design, and even added colors as we are beginning to see "consumerization" in the business market.
Highly mobile business customers continually ask for more battery life. In these news systems, battery lives can last as long as 19 hours on a single charge and have accelerated charging capabilities.
Dell Latitude ON, which provides near instant access to email, internet, and other calendar related items with multi-day battery time without full operating system start.
Better connectivity and security features with Dell Control Point. Dell Control Point is an exclusive application enabling management of all connection configurations and customizable security profiles in one spot rather than making changes in several control panels and applications.
This new product line also has significant range with everything from an ultra-portable system weighing in at only 2.2 lbs to a semi-rugged notebook, which has an outdoor viewable display and shock mounted hard drive to a product with superior graphics capabilities and a quad-core processor to handle the most demanding computing needs.

You will hear a lot about this launch over the next several weeks. I encourage you to learn more about the E-Series products at our E-Series site launch page (http://www.digitalnomads.com/).

As always, we welcome your comments and feedback on the launch through this blog. We look forward to hearing from you!