Dell unveils new servers, says not a PC company
SAN FRANCISCO (Reuters) - Dell Inc launched a new line of servers for enterprise customers, boosting its corporate business unit and shifting its focus further away from consumers, who are increasingly choosing such devices as Apple Inc's iPad.
Chief Executive Michael Dell said his namesake company is no longer a personal computer company and has transformed itself into a business that sells services and products to corporations, a lucrative market that he said is worth $3 trillion.
Corporations have grappled with ever-smaller IT budgets as slow economic growth curtails spending. But many experts say tech spending will swell over the long term as companies upgrade systems, connect to the Internet cloud, or begin to make better use of user data.
Dell's so-called enterprise business has doubled in the past five to six years and now represents half of the company's profit, he added.
"It's not really a PC company; it's an end-to-end IT company," Michael Dell said at an event in San Francisco where the company launched a new line of PowerEdge servers aimed at businesses with remote computing needs.
The company's founder said the growth of Dell's enterprise business validates its strategy of diversifying away from personal computers as a new crop of devices such as the iPad captivates buyers.
Michael Dell said he wants to focus on the enterprise and public markets, rather than a drastically smaller $250 billion consumer market.
"The consumer market is not particularly healthy and the enterprise business is much more so," Dave Johnson, Dell's strategy chief, told Reuters.
Dell's storage and networking revenue grew 10 percent last year, while sales of its desktop PCs fell 4 percent.
The world's No. 3 personal computer maker fell short of Wall Street's estimate for fourth-quarter earnings, hurt by weakness in U.S. public spending and the lingering impact of the Thailand flood on its product mix. It has also forecast weak sales for the current quarter.
Sales at Hewlett Packard's, the No. 1 PC seller, declined 15 percent in its fiscal first quarter.
Round Rock, Texas-based Dell has been waging an uphill battle to diversify its revenue base from PCs to become a larger player in the data center equipment market and IT services. It faces stiff competition in those markets from the likes of International Business Machines Corp and HP.
To help that effort, it has been acquiring companies, including Force 10 Networks and Compellent Technologies, to boost its enterprise-related products and services.
(Reporting By Poornima Gupta; Editing by Steve Orlofsky)