Dell outpacing the market

In a possible sign the PC industry is on the rebound. Dell Computer announced its earnings were on track and that first quarter sales, projected at around $ 7.9 billion may actually be $ 200 million higher than what estimated earlier.

"Supply costs have flattened somewhat, but our competitive advantage has not. We have stepped up our pursuit of internal cost reductions through still-higher levels of quality and efficiency," said Kevin Rollins, COO, Dell.

While the increased sales are a positive sign, some speculate Dell's gain may have simply come at the expense of its competitors. Rollins said Dell was benefiting despite ''industry softness and change', indicating that the sales growth may not be across the industry.

Meanwhile, Dell is sending a clear message to HP, Compaq and other competitors that it will soon have to deal with competition in several key markets Dell has not emphasized before. Those include computer services and high-end servers.

Dell is expected to enter the services market through one or more acquisitions, a highly unusual strategy for Dell, which has traditionally shunned corporate acquisitions.

One new product announced this week is Dell's entry into the 'blade server' market. Dell also said that it would begin selling 'Brick' servers that are similar to blade servers but have more computing power.

Meanwhile, Dell also said it was working closing with Microsoft to develop technology that improves connections between computer servers, data storage machines and other network devices. Engineering divisions are already working on a framework to increase support for the InfiniBand networking technology. Dell said it would use the technology in its new 'blade' and 'brick' computer servers. 

Rollins said that it would begin shipping Blade servers in the third-quarter, which will have higher margin than the Dell's current server products.

SV News Service

Austin