Michael Dell sticks to Windows 7 big bang theory

Michael Dell sticks to Windows 7 big bang theory

Summary: Dell chief Michael Dell is projecting a Windows 7 upgrade cycle that could put PC growth "well into the teens." What's unclear is whether Dell will be able to grab a bigger share of the revenue pie.

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Dell chief Michael Dell is projecting a Windows 7 upgrade cycle that could put PC growth "well into the teens." What's unclear is whether Dell will be able to grab a bigger share of the revenue pie or be outmaneuvered by rivals like HP and Acer.

Following the company's disappointing quarter, Dell executives said the timing of the Windows 7 launch hurt revenue and earnings. That's why Dell's third quarter results fell short of expectations.

On a conference call, Dell executives sounded upbeat about the fourth quarter and the fiscal year to come.

When asked about the potential for a PC replacement cycle that would be above the 10 percent growth rate usually expected, Michael Dell said:

I would not be surprised to see it well into the teens. I think there is an aging installed base for sure. You just have an accumulation of new technologies at the hardware, software, virtualized client and these IT managers really know they cannot extend the life of these client assets forever. While I don’t think it is all going to occur at once, I think it will be a rolling refresh that occurs over perhaps 18 months, I can’t remember a time when a very high percentage of them skipped an entire operating system. So what we remind them, and they know this, Windows XP is eight years old. So yes I think it is going to be a pretty possible cycle.

Next question was about the corporate upgrade cycle and Dell's market share. Will Dell go for the earnings or the market share?

We think we are holding or gaining share in the right kind of price points. Our efforts on the cost side should expand our ability to profitably compete in a larger portion of the price points. What I would also tell you is that the pipeline of client opportunities we are already seeing more client activity in the last 30-60 days than we have in a long time and the pipeline for client activity kind of going forward into next year is the strongest it has been in a long time as well. So if I look at our commercial businesses the second quarter was kind of a bottom. The third quarter was certainly better. October was the best and November will be better than October. So the length of the turn is good.

Analysts seem to buy Dell's vision for the PC market pop, but question whether the company will hang with the competition. Barclay Capital analyst Ben Reitzes wrote in a research note:

We believe this earnings report will raise some concerns with investors, given Dell’s revenue trends are tracking well behind competitors in PC’s and even storage. Also, the quarter demonstrates significant margin volatility despite a $4 billion plus cost savings program. We continue to have long-term business model concerns for Dell but we do acknowledge that the company has a large exposure to corporate PCs which should see a pick-up in mid to late 2010. We continue to prefer HP and Apple for PC exposure (and) gaining share.

Topics: Windows, Banking, Dell, Enterprise Software, Hardware, Microsoft, Operating Systems, Software

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44 comments
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  • too old?

    "Windows XP is 8 years old"

    So What? If it ain't broke don't fix it!

    Windows 2000 is ten years old and still does almost everything I need. Everyone around me runs XP or newer, yet I have far fewer problems.

    What is good for the computer industry is not necessarily good for the computer user.

    I do have a Windows 7 system for my video editing, where it actually brings utility for the price (over the XP system I had), but moving everything else I do to Windows 7 "right now" can't even justify the time it would take to do even if it were free.
    wkulecz
    • Re:

      "Windows XP is 8 years old"
      "So What? If it ain't broke don't fix it!"

      Are you sure that XP ain't broken? Care to
      explain how XP will works with Quad core
      processor when it was designed for two
      processors? Does it have IE with sandbox
      security for lowering browsing risks? These
      are two simple examples that, at least for me,
      proves that Windows XP needed a replacement.
      dvm
      • buying new features is one thing ...

        If you are buying new hardware that needs new OS features obviously a new OS is part of the deal, but the article seems to suggest that usefully working systems should be replaced just because the OS is "old".

        Retraining will not be free moving from XP to Windows 7 either.

        Sound business cost/benefit analysis should drive the decision, not the idea that the OS is "old" and needs replacing or that I should help Micheal Dell's bottom line.
        wkulecz
        • why is it

          that you insist on taking this article as a personal assault on you by Dell to buy a new computer. No one has a gun to you head. As you said yourself, you have a Win 7 box to use for features that actually benefit what you need to get done. Great! Move on with life. All that was stated here is that Dell, for reasons given, expects strong PC demand in the near to medium term. What is so wrong with that to warrant the negative comments?

          "The views expressed here are mine and do not reflect the official opinion of my employer or the organization through which the Internet was accessed."
          gnesterenko
        • Retraining?

          I've heard this argument being foisted numerous times and I just don't get it. I've been using Windows 7 since the beta came out in January.

          Now, Ok.. There are a few adjustments that you gotta make. The taskbar needs about 5 minutes worth of time to learn how it works and may take an hour or two to get used to it.

          But beyond that, the start menu is pretty close to the one that came with Vista and maybe takes 5 - 10 minutes to learn how to use it. 15 if you're really, really slow on the uptake.

          Once you show users how things have been improved, and they can see the benefits of the changes that were made, I think most people would be more than happy to jump on the new OS's features.

          Icons on the desktop work pretty much exactly the same way icons on the desktop worked under EVERY version of Windows since 95.

          Unless you're in IT and have to learn the ins and outs of the guts of Windows 7 because you have to install things so they work on your network, your entire argument is quite spurious. The bottom line: Windows 7 isn't all THAT different different from previous versions of Windows. It's still Windows - only better.

          Wolfie2K3
      • IF IT AIN'T BROKE

        Should I be replaced because i might get sick, or dont understand quantium physicis?

        Don't fix it. if you are happy with your pc, dont't have the need to run new software or whatever, then why upgrade.

        XP was not perfect, SP3 was just about a system overhaul anyway. IE8 is better than any version of IE in the past. Now it works great.

        who cares about running 4 cores, or 38 gigs of ram, or terabites of hard drive space. what are you saving - all the info in the world?

        If you have the reason to need this horsepower to support yourself, or run a busisness, then get new hardware.

        Whats the point of driving a top fuel dragster down the street when the speed limit is 30 mph? . would there be a need for that? Do you need a Bugatti to drive to work, or would a toyota get you there just the same?


        It would be nice to have a new pc, but i dont need one personaly.


        If you have more money than brains, dell or Apple would be more than happy to take money off your hands.

        I run XP and dont have problems with virus and the other crap out there. But alot of people could care less about firewalls or anti virus programs. they just want to read emails, Twitter/Myspace, Blog and download illegal music for their Ipods. they want a machine to just work like a tv. it just works or it's broke.

        some people just gotta have the latest and greatest. if you can afford it, get it.


        Flame me all you want I dont care. I like XP. it does what i need. But eventualy i will have to move to win 7 or 8 or 9 when this pc craps out because nobody will write drivers for xp in a few years anyway.


        By the way, My 73 "true Pontiac" Ventura smokes most but not all of the "High dollar cars" on the road today with ease with mostly factory GM stock performance parts from that erra and has AC. and its 37 years old.
        The only thing i cant pass is the gas station. ; )
        GASGTO73@...
    • XP has a number of fundamental flaws that most users should care about

      Not least of which is that 95% of XP users are running with full admin rights. This is why, when a user is attacked by malware, that malware has carte blanche access to the entire machine.

      This one feature is, for me at least, the most important reason users should upgrade to Win7.

      In Vista+, all users run as as standard, non-admin users. Therefore, the protection applied to the filesystem (program files are non writeable) and the Registry (HKLM is non writable) kick in to protected the user from a wide range of malicious and accidental attack.

      If every XP user switched to Vista or Win7 tomorrow, 80% of malware would suddenly be rendered obsolete.

      Of course, MS and ISV's have to remain vigilant and continue to work hard to thwart the malware developers, but it'd be a thousand times easier to do so if users were not running as admin by default.
      de-void-21165590650301806002836337787023
      • I like Vista and Win 7 too but...

        ...nothing stops a user from creating a standard account and using it. That was the real purpose of UAC, now most programs can run just fine as single user out of the box.

        Tweak some permissions and even balky programs will work. If Joe Sixpack can't do it a little pizza buys a lot of tech support! :)
        wolf_z
      • Good, you finally unveil the truth:

        Microsoft Windows has a number of fundamental flaws. For years I'm repeating this but most people don't want to hear, or try to apologize for everything's wrong in Microsoft Windows. At least, some years late you see the truth!
        theo_durcan
      • Yes, switch to Win7 - - M$ needs the sales

        And I also need to have you click in my nanny screen because your too dumb to use a computer and the Redmond borg knows what's best for you.
        Wintel BSOD
  • We need a big bang in this economy

    Thank goodness for Windows 7! It's going to spark an explosion of PC sales that will help put some juice into this languishing economy.

    At least that's the picture that's being painted. I'm somewhat less optimistic about Windows 7's positive impact on the world.
    SteveMak
    • Can I have some of what you're ingesting?

      See, if the current economy was brought about by the devaluation of wages or the elimination of jobs, people will be unable to spend. It's impossible to delegate wages forever, you know.

      That will be the real juice to the economy: Restoring middle class-paying jobs.
      HypnoToad72
      • So very TRUE!!!!

        Cut jobs and dumb more work on those who are STUCK working for
        you out of fear of loosing their pay and benefits mainly Health Care.
        So you add to you're existing employee's health woe's by putting
        inhumane amounts of stress on them and as the years pass reducing
        their income and benefits even for those who are still employed. So
        with everything else those who still have checks coming in find they
        can purchase less and less. Their existing bills get larger like say
        utilities and insurance if the rent that goes up another 5 percent each
        and every year but their raises are none existent or in the range of 2
        to 3 percent if they are extremely lucky and get a raise. So what does
        an entire economy do that is based on the "consumer"? I wonder what
        it can do..... Something has to give it's basic economics people. If you
        don't pay you're workers enough to purchase stuff.... They won't
        purchase END OF STORY!

        Pagan jim
        James Quinn
  • Dell still can't figure out who they want to be.

    I see Dell floundering with their identity and the product mix they want to sell. they seem to go which ever way the wind is blowing that day.
    No_Ax_to_Grind
    • Oddly enough they suffer from their old success...

      Back in the day before Dell PC's sold at a fairly high margin. I
      remember XT's selling in the range of several thousand dollars per
      system. Then came Dell and the entire PC industry began eating it's
      own. Till at one time Dell became king of the hill but still their were
      others out there willing to sell their souls and keep margins razor
      thing so Dell could not increase margins and had reached it's zenith.
      Dell could only begin to slip backwards and so it had/has done so.
      Dell for some time now has been searching for markets where it can
      get better margins like Apple but has been unable to do so for several
      reasons not the least of which is that they can't break the habit of
      selling for less in each market they enter. Old habits die hard it would
      seem.

      Pagan jim
      James Quinn
  • I think it is hopeful thinking.

    Few people I know are in the market for a new computer regardless of price. Not Dell per se, but the economy. I have a request to dual boot a 5 year old HP notebook that has a bad DVD drive. The person bought an external DVD drive, I unplugged the internal drive (it was babbling causing Windows to crash constantly) to tide them over and will dual boot Mandriva with a restored (5 years original image, you want to talk about a slowwwwwwww machine right now, lol).

    Point is, I think a large portion of purchases will really be based on need and not desire this year.

    TripleII
    TripleII-21189418044173169409978279405827
    • Right you are!

      If one doesn't need it, why buy it?

      Personally, if I were buying (instead of building, as usual), I would buy from Dell. For the simple reason they didn't absolutely knuckle under to Microsoft, and their products are (at least) as good as anybody else's, if not better.
      Ole Man
    • People will need to buy this year more so then before

      Because they HAVEN't been buying since the market tanked over a year ago and since Vista had a poor reception, so they waited out. THere's a lot of pent up demand that was simply waiting for somthing better then Vista. Dells assumptions are good logic and I would bet money (if I had money to bet) on them being right.

      "The views expressed here are mine and do not reflect the official opinion of my employer or the organization through which the Internet was accessed."
      gnesterenko
      • I disagree ...

        ... I am typing this on a 5 year old Acer laptop running an AMD Turion64 with 2GB RAM, 80GB HDD running Win7 x64 and it runs like a champ.

        Sure, it's not a rocketship, but it cold-boots in < 45s, sleeps in < 2s, resumes in less than 3s and hasn't crashed on me since Vista Beta3!!

        The point is that even PC's from circa 2003/2003 are more than capable of running Win7 happily. It might need a little more RAM if the machine has < 1GB RAM today, but other than that' you should see similar/better performance than XP on the same tin.

        If you don't need to play the latest games and don't need to crunch large datasets or build complex software, then you don't need a rocketship.
        de-void-21165590650301806002836337787023
        • I agree with your disagreement :P

          Maybe it's a weird day, but I didn't think I'd ever agree with you on anything!
          zkiwi