In a visit to Houston on Wednesday, Michael Dell said he views flat-panel TVs as a natural extension of Dell Inc.'s product line.
The native Houstonian, in town to promote Dell’s computer clustering technology, did not say when the company would roll out the product but said consumers increasingly want to use their personal computers and TVs interchangeably.
“Our intention as we add these things is not necessarily, `Let’s go be a big TV company,”’ Dell, 38, said. “We’re taking this from a computing-centric view first and foremost.”
The No. 1 personal computer maker and its competitors have increasingly woven consumer electronics into their product lines as demand for PCs has waned.
For example, Gateway already offers flat-screen TVs, and Hewlett-Packard sells digital cameras.
Dell’s entry into the flat-screen TV market, populated by Sharp, Samsung and others, has been the source of much speculation in recent days.
According to a supplier interviewed by Bloomberg News, Dell plans to offer 26-inch and 30-inch screens next year.
Attacking new markets is nothing new for Dell, which recently began selling printers in a direct assault on its rival and the leader in printer sales, HP.
But Dell clearly sees TVs and other such products as more sizzle than steak.
“Sometimes the things that are exciting and easy to understand, but aren’t necessarily high volume, get a lot of attention,” he said.
Dell spent most of his morning touting the company’s clustering technology at CGG Americas in west Houston.
CGG, a global oil services company, uses more than 3,000 Dell servers linked together to process seismic data for itself and oil and gas clients. The cluster, Dell said, is the world’s 48th-largest “supercomputer.”
“Clusters are a little harder to understand but quite frankly are more important to our business than flat-screen TVs,” Dell said.
Servers are the computers that power Web sites, e-mail systems and corporate networks, and brisk shipments of those products in the second quarter helped Dell increase its profit 24 percent to $621 million on revenues of $9.78 billion.
The company’s performance in the midst of a still-slow sales environment has impressed analysts and pleased investors.
Dell sells directly to consumers via the Web and phone – cutting out the middleman – in a strategy that allows it to pass on lower costs and fight competition.
Last month, for example, the company slashed prices on computers, printers and other products by up to 22 percent during the back-to-school season.
The move also came shortly after HP had posted a loss in its PC business.
Dell also has kept a tight rein on costs. In its last quarter, operating expenses were a record low 9.6 percent of revenues.
“In our case, our revenues are going up faster than our expenses are, so our proportion of expenses are going down,” he said.
College dropout Dell earned his reputation for savvy business moves after founding the company with $1,000.
The son of an orthodontist and financial adviser, Dell was an entrepreneur long before he founded what has become a $35 billion company based in Round Rock.
While in his teens, he sold subscriptions for The Houston Post, earning $18,000 a year.
“I sold a lot of newspapers for a kid in high school,” he said.
These days, he’s looking to overseas markets for growth, especially India and China, where its business grew 71 percent in the second quarter.
“When I think of new opportunities, I think of China,” he said.
Despite continued weakness in technology spending, however, Dell thinks his company is poised to grow in the United States. U.S. shipments increased 23 percent last quarter.
Source: New York Times Syndicate
