Dell Fights To Maintain Share
0Overall Score

Direct vendor Dell Australia is fighting back in the fourth quarter as third placed Acer threatens to over take it in the client PC stakes.

Dell Computer Australia is discounting heavily in November and December targeting business and consumers with heavy discounts across arrange of machines and display products. A series of special deals run over short periods seems designed to clear out older components suggesting either an inventory build up or some special pricing obtained from component vendors including Intel.

Low system prices using slightly dated processors are proving a boon for buyers, while price cutting on large LCD displays could attract holiday shoppers looking for well priced large format PC monitors.

The aggressive pricing comes after a 3rd Quarter pasting from number three player Acer Computers, which gained marketshare on the direct vendor in the desktop and notebook space. Dell is also under pressure from the increased number of notebook players including ASUS and BenQ which entered the market last year.

IDC PC hardware analyst Michael Sager said that Dell’s aggressive market stance was not that unusual with at least one vendor or another typically attacking the market each quarter. “In any given quarter you will find that one of the vendors is heavily discounting,” he said. “It’s often either Acer or Dell.”

This Quarter it is Dell.

Sager said IDC Australia’s quarterly tracker results for Q3 2005 were recently finalised and indicated that on a marketshare basis Dell had suffered something of a set back, but is still holding second place in the rankings.

“Dell have very high growth expectations,” said Sager. “They have been second for a long time.”

But Sager said the latest results showed that Dell lost ground to number one player Hewlett Packard over the past year. In third Quarter 2004 Dell was only 2.5 per cent behind HP, in this year’s 3rd Quarter that margin had blown out to 4.3 per cent (for servers, desktops and notebooks combined).

At the same time, Acer has closed the gap between third and second, shrinking the numbers from 4.5 percent a year ago (Q3 2004) to just 1.8 per cent (for servers, desktops and notebooks combined), said Sager.

Globally the company is in great shape, but not good enough for Chief Executive Officer, Kevin Rollins. Announcing Q3 results in the US which showed Dell had record shipments of 9.2 million units worldwide in the quarter, a 36% growth in its fledgling services business (to US$1.2 billion) and revenues of US$13.9 for the three months, Rollins said: “Our operating performance was again exceptional by any comparable measure. However, we hold ourselves to higher standards.”

This has prompted the company to layoff 1000 staff in the US. It has also turned to discount retailer Costco to help it clear out older model desktops and laptops. Dell’s consumer business is suffering from its insistence on Intel only platforms at a time when AMD is enjoying runaway success in the desktop and media centre market of North America.

Though Corporate Communications Manager for Dell Australia, Paul McKeon, denied there had been any redundancies locally, several Aussie staffers have reportedly left the company recently.