Dell ready to fight for PC top spot

Slashing prices is a good place to start...

Dell is looking to grow its profits by aggressively building upon its position in the global PC market, through the instigation of price wars, and the implementation of cost-cutting measures. Speaking at a conference in California yesterday, Dell CEO Michael Dell said he believes his company can capture 30 to 40 per cent of the worldwide PC market over time by lowering prices on PC hardware to win new customers. While the PC market has stumbled in the past two years, Dell has shown the ability to grow, picking up several points of market share. The company went from having around 13 per cent of the worldwide PC market to owning nearly 16 per cent between the fourth quarter of 2001 and the fourth quarter of 2002, according to reports from research firms Gartner and IDC. Still, Dell would have to double its current market share to reach its new goals. And in its attempts to increase its market share, the PC maker has found itself head-to-head in a battle against Hewlett-Packard. HP executives have said they don't plan to give any ground to their major rival and are expected to challenge Dell for the top market share spot in coming quarters. Dell came out on top during the third quarter of 2002, but HP won that spot back by about 120,000 units in the fourth quarter of 2002. HP had 16.1 per cent of the market to Dell's 15.7 per cent during the fourth quarter, according to reports by IDC and Gartner. Dell expects to win market share in part by lowering its costs, executives said. The company reduced its costs by about $1.2bn in its fiscal year 2003. It expects to more than double those costs savings in its fiscal 2004, which runs nearly concurrent with calendar 2003. "We expect to realise a little over $3bn in savings" during the fiscal year, Dell's CEO said. "Some of our savings will be used to increase margins, but most will be invested in the business to grow market share." Dell typically passes about 75 per cent of its cost savings on to customers in the form of lower prices, he added. Dell will use those lower prices resulting from the cost-savings as a weapon to gain market share against competitors, though Dell said he hasn't taken aim at a particular company. "We don't necessarily target a particular competitor," he said. "What we target is delivering more value to the customer."