AUSTIN, Texas—Officials with Dell Inc. expect the companys strong growth to continue for the foreseeable future.
First-quarter revenues are on target to come in at about $13.4 billion, and the computer maker expects to reach its goal of $80 billion in annual sales within the next two or three years, officials said here at a meeting with analysts and reporters.
CEO Kevin Rollins will reiterate these points Thursday during the Round Rock, Texas, companys annual analyst meeting.
In a prepared statement released Wednesday, Rollins attributed Dells growth to carefully selecting new product and service areas for the company and ramping up existing businesses.
Dell officials said that during the meeting Thursday, Rollins will talk about four areas that the company expects will continue to grow quickly: servers, storage, mobile computing and printing.
Growth in regions beyond the United States also will be a factor, they said.
During the series of meetings with analysts and reporters, Dell officials focused on the printing and services businesses as examples of their companys deliberate strategy for moving into high-growth opportunities and adding revenue streams that arent tied directly to selling boxes.
After years of selling third-party printers, Dell sold its first branded printer in April 2003.
Since then, it has sold more than 7 billion printers, has a portfolio of more than 22 products and has expanded into more than 23 countries, said Ro Perra, senior vice president of Dells Americas unit.
Dell has given particular attention to the inkjet all-in-one and color laser jet businesses, growing to 16 percent and 10 percent market share, respectively, Perra said.
Associated products that offer recurring revenue—in particular, ink and toner cartridges—represent about 32 percent of the revenue in Dells printer business.
The push in the
Increasing that will be important as Dell tries to grow the business, Angele Boyd, an analyst with IDC, said in an interview before the meetings.
For the largest printer vendors—such as Hewlett-Packard Co. and Lexmark International Inc.—such products account for more than half of printer revenues, said Boyd, in Framingham, Mass.
Perra said he didnt expect that percentage to increase drastically in the near term, but added that Dells key push in the printing business is building up the companys installed base, which will lead to greater sales of such “consumerable” products.
In addition, such services as enabling customers to automatically order more ink cartridges from Dells Web site, and shipping up to 99 percent of all printers on the same day theyre ordered, will help, he said.
Boyd said that while Dell is seeing high growth rates in many of its printer products, HP still dwarfs it in overall numbers and market share.
What Dell needs to do is grow its commercial printer business, she said. Corporations do more printing than consumers, and thus consume more ink and toner.
“They made the most gains in the low-end consumer [segment],” Boyd said. “Whats next in terms of commercial? … The strategy is to get the installed base up. The question now is, is that installed base paying off, or when will it pay off?”
Officials with Dells services group said they will continue to be careful in deciding in which direction to expand.
The company currently focuses on professional services, training services, managed services and support services.
However, Dell is addressing only a $90 billion segment of a $600 billion industry, and currently has an annual run rate of $4 billion.
Joe Marengi, who like Perra is a senior vice president of Dells Americas unit, said Dell has no ambition of growing a massive services business to rival the likes of IBM or HP.
Instead, the company will focus on companies that already do business with Dell through hardware purchases, he said.
“If there is a certain project out there that doesnt have anything at all to do with Dell, then we probably wouldnt bid on it,” Marengi said.
Even with that, however, Marengi and Gary Cotshott, vice president of Dell Services, said there is high growth opportunity in services. Over the past six years, Dells services business has grown at an annual compound rate of 30 percent, and last year grew 34 percent, they said.