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Dell to alter product configurations, launch smartphones

 Personal computer maker Dell Inc. said it expects memory chip prices to remain high for several months, leading it to reconfigure its product line-up to maintain competitive prices and profits.

The world's third-largest PC maker by sales is also betting on its planned launch of tablet PCs and more smartphones to boost growth. Dell, a late entrant in the smartphone segment, seems to be countering traditional PC rival Hewlett-Packard Co.'s buy of smartphone maker Palm Inc. Hewlett-Packard is expected to use Palm's operating system for its future launch of tablets.

Dell will introduce more smartphone models later this year in China, the world's largest mobile phone market, Steve Felice, Dell's president of consumer, small and medium business, said in an earnings conference call with journalists in Asia. The company had launched a model with China Mobile in the January-March quarter.

He added that later this year Dell will start selling a smartphone in India, the world's fastest-growing and second-largest mobile phone market.

Felice also said that Dell is launching a five-inch tablet in Europe and in the U.S. starting in the second half of this year.

"We haven't announced plans to introduce that (tablet) in China yet," he said.

Dell, meanwhile, expects memory-chip prices to stay high this year.

"Memory costs are going to continue to stay high for several more months and we will continue to manage that carefully," Felice said.

Dell's large consumption of dynamic random access memory chips and its direct negotiations with chip suppliers give the company a good idea of how prices are shaping up.

Felice said Dell will try to buy memory much in advance and alter configurations of its products to maintain competitive pricing with an "appropriate" level of profitability.

The company's first-quarter profit improved 52% as shipments jumped and revenue grew in each product segment, even though its gross margin slid to 16.9% from 17.6%.

Margins were affected by component shortages, which led to more expensive parts, as well as a larger mix of less profitable products, Chief Financial Officer Brian Gladden had said earlier.

Dell, which started selling products directly to customers in order to compete with rivals such as Hewlett-Packard Co. and Apple Inc., has seen its traditional low-cost model undermined by Asian rivals.

Technology research firm Gartner said in April that Taiwan-based Acer Inc.'s worldwide first-quarter market share of personal computers rose to 14.2% from 11.7% a year earlier. The market share of Taiwan's ASUSTeK Computer Inc. increased to 5.5% from 3.3%, while the share of Hewlett-Packard fell and Dell's remained flat.

Gartner said Acer's business model allows it to meet price points that other vendors find difficult to match while ASUSTeK's mini-notebook launch in 2008 helped it quickly increase market share.

"HP, Apple, and Microsoft can all rely on profitable businesses to fund expansions and realignments, while Dell relies on volume and strict cost reductions to produce profits," senior analyst Allan B. Krans of Technology Business Research Inc. said in a note Friday.

But Dell's Felice feels the success of these mini-notebooks is "over exuberance" by competitors.

"What's been happening is that there has been a higher number of units sold in lower price bands and in the netbook range and that's why they have had share gains," Felice said.

"We have done well in higher price bands in the richer configured products--they derive a higher level of profitability. The profitability of our business is much higher than Acer's," he said.

Felice said emerging markets including India and China continue to be the focus markets for the company.

However, Dell's growth in Japan continues to be flat due to the economic conditions there, Felice said.

Источник: Total Telecom

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