Dell complaints

PC shipments there increased by 30 percent in second quarter, CEO says.

By Philip Lagerkranser

BLOOMBERG NEWS

Friday, August 05, 2005

HONG KONG — Dell Inc. probably increased its second-quarter shipments in China by about 30 percent, CEO Kevin Rollins said.

Dell's first-quarter sales of desktop PCs, laptops and servers in China were up 30 percent from a year earlier, and "our guess is that it's going to be in the same range in the second quarter," Rollins said Thursday in Hong Kong.

Dell is expanding in China, and growth there is outpacing growth in the U.S. and Europe. The world's most populous country is now Dell's fourth-biggest market and its fastest-growing. The company Wednesday announced plans to open its second factory in China in the first quarter of next year.

Dell still lags Lenovo Group Ltd. in China and other Asian markets. Beijing-based Lenovo, which bought IBM Corp.'s PC unit in May, overtook Hewlett-Packard Co. as the biggest PC vendor in Asia and the Pacific in the second quarter, researcher IDC said last month. Dell is No. 3 in the region.

Dell has taken customers from Lenovo since the IBM purchase, Rollins said. But he added that Dell has been gaining market share for years, and the client defections aren't necessarily tied to the takeover.

Lenovo's share of the Chinese PC market fell to 25 percent in the first quarter from 28 percent in the previous quarter, while Dell's climbed to 8.4 percent from 7.5 percent, according to IDC. The researcher will probably publish China market share figures next week, Rollins said.

Although he touted the number of PCs the company shipped, he wouldn't say how computer prices in China are developing.

Dell's second China factory will initially double Dell's manufacturing capacity in the country, though capacity may triple as the plant becomes more efficient, Rollins said. Dell is currently focusing Asian manufacturing investments on China rather than India, he said.

"Maybe in the future we'll bring India into that focus," Rollins said.

China's decision last month to let its currency value rise 2.1 percent after a decade of being pegged at about 8.3 yuan to the dollar won't have "any major impact" on Dell's business in the country or on its investment plans there, Rollins said.