Dell Looks to Tablets After Strong First Quarter

Dell reported a strong first quarter for its fiscal year 2011, with revenue reaching $14.9 billion (£10.4 billion), up 21 percent from its $12.3 billion a year ago. Net income for the quarter, Dell announced yesterday, was $584 million (£407.8 million).

Executives emphasised the increasing growth on the enterprise side of Dell’s business, which saw revenues of $4.2 billion (£2.9bn), up 25 percent year-on-year. Its servers, storage and services revenue grew a combined 38 percent, and overall revenue, operating income and shipments were each up by at least 20 percent.

With US enterprises still slowly recovering from the recession, Dell saw 48 percent of its revenue come from outside the US. Growth in BRIC countries was particularly strong, accounting for 12 percent of Dell’s total revenue and up 60 percent from a year ago. In India and Brazil, Dell saw 90 percent and 81 percent year-on-year growth respectively.

Dell’s presence on the consumer side of the fence, however, remains important.

When chief executive, Michael Dell was posed a question about competitor HP’s purchase of smartphone maker Palm, and whether Dell felt a need to make a similar acquisition, analysts and media on the call may have collectively wondered: Does Michael Dell have an Apple iPad?

Dell offered: “One of the most immediate opportunities we see with all of the users coming online is the tremendous build-out of the data centre to feed all of that data. So we’re very focused on our data centre custom-solutions business and providing the infrastructure to all of the content providers and telcos who are feeding on all that data.”

Dell added that the company’s products are reportedly behind 19 of the world’s 25 largest websites.

“You’re also starting to see us a bit on the device side,” Dell said, referring to the introduction of the Dell Mini 3 smartphone, which runs Android, in November 2009. “We’re very much working with Android and Windows Mobile 7, and we see those platforms as more attractive alternatives to other suggestions that you may have offered.”

One analyst pressed Dell on his thoughts about the tablet space, and whether he suspects that category of devices might affect Dell’s enterprise business.

“Well, I think it’s pretty interesting. Whenever a new device comes along it’s always kind of fun to get one and play around and kind of see what it’s all about,” Dell said.

“My view is that these devices are really good for content consumption and they’re not so much content creation devices. They also appear to be devices that create a whole new usage pattern and a whole new demand for data. Which is a good thing,” he continued.

“And they don’t necessarily replace an existing device, per se. Could you on occasion use this device instead of another, yes. But generally speaking, the tablet form factor looks to me like a whole other device and a whole other purchase pattern.”

Which seems like a thing Dell might be interested in.

In the first quarter of 2010, Gartner ranked Dell as having the third-largest PC market share worldwide. Acer ranked second, and first place again went to HP – which, following its purchase of Palm, is rumoured to be working on a tablet called the HP Hurricane that would feature Palm’s popular WebOS.