Dell Inc, the world's largest manufacturer of personal computers, is prepared to cut prices further in Asia as the company seeks to overtake rivals Lenovo Group Ltd (
"We may have to do that if required. We have to stay in a competitive band of pricing," Steve Felice, Asia-Pacific president of Dell, said in an interview yesterday.
"We're on a path to be number one" and "it may take two, three, four years," he said.
Dell is turning to Asia, which is home to some of the world's fastest-growing economies, to lower costs and bolster earnings.
The Round Rock, Texas-based company on Thursday said fiscal first-quarter profit fell 18 percent to US$762 million, as it cut prices to win customers.
Sales gained 6.2 percent to US$14.2 billion, with Asia, the fastest-growing region, accounting for 13 percent.
"If Steve's looking to beat Lenovo, he's got to be really aggressive to get there," said Bryan Ma, Singapore-based associate director at research company IDC.
"Cutting prices is a short-term move for a quick aim at the market," Ma said.
Dell had an 8.5 percent market share of the personal computer industry in Asia, excluding Japan, in the three months ended March 31, placing it behind Purchase, New York-based Lenovo and Palo Alto, California-based Hewlett-Packard, according to IDC.
"We expect to continue healthy growth in the region and certainly not expecting it to slow down," Felice said.
"In fact, it will accelerate," he added.
The company has about a 10 percent market share in Asia, Felice said.
Dell is "very close to site selection" for its first manufacturing plant in India, and expects to hire more employees in Asia, Felice said.
Hewlett-Packard, Dell's closest rival, on May 16 posted a 51 percent profit increase to US$1.46 billion in the period ended April 30, by cutting costs and gaining customers with lower prices, grabbing market share from Dell. Hewlett-Packard will close 84 data centers worldwide as part of a plan by chief executive officer Mark Hurd to save US$1 billion.
Dell's worldwide PC market share dropped to 16.5 percent in the calendar first quarter, from 16.9 percent a year earlier, according to market researcher Gartner Inc. Hewlett-Packard raised its share to 14.9 percent from 13.8 percent, and Lenovo's share slipped to 6 percent from 6.1 percent, Gartner said.
Dell chief executive officer Kevin Rollins on Thursday said that the company would speed up a plan to cut US$3 billion in costs,without trimming jobs.
"Without any type of layoffs, we fear its Taiwan suppliers could face even more margin pressure," Kirk Yang (楊應超), head of Asia technology hardware research at Citigroup Inc, wrote in a note yesterday.
"Its aggressive pricing actions are negative to both its Asia suppliers and competitors," Yang wrote.
Hon Hai Precision Industry Co (
Quanta Computer will give back to Dell 1.5 percent of its revenue this year from the PC maker as a condition of getting next year's orders, DigiTimes reported on April 26, without saying where it got the information.
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