Dell 'watchful' of Asia's economic conditions

PC maker's head for Asia-Pacific reports another "exceptional quarter" for the region, but says he is monitoring economic pressures in markets such as India.
Written by Vivian Yeo, Contributor

Even as Dell continues its strong showing in Asia, the company is keeping a watchful eye on inflation and other economic pressures, according to a senior regional executive.

In a call with regional media Friday on Dell's second-quarter results, Stephen Felice, Dell's president for Asia-Pacific and Japan, said he was in a "watch mode" going forward.

Felice, also senior vice president at Dell, said his outlook generally remains unchanged but is taking a cautionary approach "in line with potential changes due to economic conditions".

"The thing I'm most concerned about--from an Asian country standpoint--is the increased level of inflation," he said, while noting India as among the markets affected by inflationary pressures.

Felice added: "These conditions can signal potential problems going forward. Having said that, you just saw from our quarterly performance--we haven't experienced it yet. So it's more of a 'watch out'."

Revenue-wise, the Asia-Pacific region in Q2 jumped 25 percent over the same period last year, while unit shipment grew 28 percent over 2007, reported Felice. Dell, he said, grew its revenues about 50 percent faster than its top two competitors in the region, which averaged about 17 percent. The company saw growth from all product segments--desktops, notebooks and servers.

The PC maker, he noted, also "maintained very healthy growing profitability" in the region. Earlier Tuesday, Dell reported that its overall second quarter profits were down 17 percent from last year, even though revenues were up 11 percent.

According to Felice, India and China continued their strong showing, with year-on-year revenue growth of 59 percent, and 33 percent, respectively. Shipment growth stood at 63 percent for India--down from 89 percent growth last quarter--and 38 percent in China.

Over in Southeast Asia, revenue growth averaged 30 percent, he added.

Felice pointed out that Dell has over the course of this year been "very proactive" in introducing new products, such as the new Vostro machines announced earlier this week, that the company feels will expand its customer reach further. The latest Vostro products are targeted at some 20 initial emerging markets, of which key ones in Asia are China, India, Indonesia, the Philippines and Vietnam.

"[The announcement] is a very telling example of where we're headed as a company in developing targeted products for emerging countries," said Felice. "Rather than starting in the U.S., this is a series of products that are going to be sold primarily in the emerging countries, and then we will branch out later.

"I think we've taken a very bold step with these new products…what we have done here is we've attempted to give SMBs (small and midsize businesses) a product where they can scale and grow their business but do so in a very affordable way. That's what they've been asking for," he added.

Vostro, along with other products to come, will put Dell in a position to grow faster than the industry, said Felice. "The industry is still projecting double-digit growth--I still want to grow faster than the industry," he added.

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