Dell Aims to To Double China PC Market Share
Thu Aug 4, 2005
By Sophie Taylor
HONG KONG (Reuters) - Dell Inc. (DELL.O: Quote, Profile, Research), the world's largest PC maker, said on Thursday it hopes to eventually command a fifth of the China market, doubling its current share to challenge local leader Lenovo (0992.HK: Quote, Profile, Research) on its own home turf.
Dell hopes to bring its current market share in China, which research firm IDC now puts at about 8.4 percent, in line with its share of the global PC market which IDC puts at 19 percent.
"The China market is growing quite rapidly right now... it's our strategic focus right now," said Chief Executive Officer Kevin Rollins during a media briefing in Hong Kong.
He did not provide a timetable for reaching the goal.
The company's unit shipments in China rose 30 percent in the first quarter of 2005, Rollins said. Its China sales, worth $1.5 billion, made up 3 percent of worldwide annual revenue over the last four quarters.
The company has been an aggressive player in both China and Japan's PC markets in recent years, rapidly building up share where it was previously a relatively small player with aggressive pricing and strong marketing.
It also hopes to boost production capacity by 2 to 3 times with a new facility at its base in the southern Chinese city of Xiamen. The complex serves the company's sales in the north Asia region, which includes South Korea and Japan.
Dell, which is due to report second-quarter results next week, declined to comment on the size of the investment, or headcount targets.
Dell is currently the number-three PC vendor at 9 percent in the Asia-Pacific region, excluding Japan, according to market research firm IDC.
Lenovo Group recaptured its leading position, with 19 percent of the market, from Hewlett-Packard (HPQ.N: Quote, Profile, Research) in the second quarter, posting strong shipment gains on its recent purchase of IBM's (IBM.N: Quote, Profile, Research) PC-making assets.
Rollins said the IBM-Lenovo deal had not changed Dell's strategy, adding that he saw further consolidation in the computer-making industry.
"I think there will be continued consolidation ... It's not so much Asian companies buying other companies so much as it's a very competitive industry," Rollins said.
After focusing more on the business segment during its early years in China, Dell has more recently started to go after the much larger low-end of the consumer market, launching campaigns that included an offer of PCs costing as little as 2,999 yuan (US$370) earlier this year.
Lenovo introduced low-cost PCs last year in a bid to woo residents of less-affluent smaller cities and the countryside.
Dell competes with multinationals like IBM (IBM.N: Quote, Profile, Research) and Hewlett-Packard Co. (HPQ.N: Quote, Profile, Research) in both China and Japan, and also faces local heavyweights like Lenovo Group Ltd. (0992.HK: Quote, Profile, Research) in China and Toshiba (6502.T: Quote, Profile, Research) and NEC Corp. (6701.T: Quote, Profile, Research) in Japan.
(US$1=8.11 yuan)
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