The rise of tablet devices such as the iPad does not mean the market for personal computers is in terminal decline, says Dell's president Steve Felice.
Dell: PCs and laptops to survive in tablet age
The market for personal computers is wired for growth despite the rise of the iPad, according to the president of one of the world's biggest technology firms.
Strong sales of tablets have hit the sales growth of laptop and desktop machines, with the PC market forecast to contract by 1.2 per cent this year - the first fall in more than a decade.
But Steve Felice, the president and chief commercial officer at Dell, says the market for desktop and laptop computers is far from being in terminal decline.
"We don't think the PC is anywhere near dead," he says. "We don't think it's high growth, but we certainly expect [the market] to grow for the next five years."
According to forecasts by the market-research firm IHS iSuppli, there will be 349 million PC shipments this year, down from 353 million last year.
That marks the first decline in the PC market since the 2001 dot-com bust, the firm says. Lower laptop and desktop sales have been attributed in part to a boom in popularity of tablet devices.
Mr Felice says PCs have life in them yet - and any blip in sales is more to do with the wider economic gloom.
"I think most of the decline in the near term has been more economics-driven. The PC-penetration rate in too many countries around the world is very, very low.
"It is still the number one productivity device that economies, businesses and governments use to advance their development."
Here, Mr Felice talks about his outlook for PC sales, as well as the wider technology trends in the Middle East.
Can the PC and laptop survive in the age of the tablet?
The facts speak for themselves. In India, the PC penetration rate is only 5 per cent. And where populations are growing the most, the PC is still the predominate technology. People look at the US, and they see that the PC growth has slowed, because many people already have a PC, so it's just going to go now into the normal replacement cycle. But most of the world is still getting used to technology.
Some people have suggested that the PC is dead, and that the tablet will take over. Do you agree?
It's not necessarily just going to be a tablet world. [Laptops] are going to keep getting thinner. And after a while you're going to see an evolution where it's hard to tell the difference between a tablet and a notebook. We have a product that's very thin, a fully functional notebook, but the screen [is hinged] and flips and it becomes a tablet. So you just close it and it becomes a tablet. So these are the kind of developments that are happening. The products are getting thinner and thinner.
Dell launched a new tablet in September. What are your expectations for sales in the Middle East?
It's a global launch and it's timed with the release of Windows 8. We expect good things out of this. I think people have been waiting for quite a while to have the Windows native touch product. We're looking at this as much from a commercial angle as a consumer angle. And there's a lot of unmet needs right now in using tablets in a work environment - around security, systems management and data management, serviceability.
Some analysts say Dell failed to enter the tablet market early enough. Is the launch of Dell's new tablet too little, too late?
We're confident that we can build a strong ecosystem of technologies. The tablet is still quite a limited device, mainly for content-viewing. I believe we're really at the beginning of these technology changes. The tablet is an interesting form factor, but it's going to continue to change. And so there's a lot more to come in this space, and plenty of time for Dell to do well here.
There's a lot of talk at the moment around "bring your own device", where employees bring their own computers and smartphones into work. Is that a trend you see in the Middle East?
Absolutely ... I did a show of hands with customers [in the Middle East] and all of them are dealing with this. Not all of them are ready to implement, because they have issues around security, for example. Our finding, around the world, is that employees are asking to bring their devices, but most of the businesses are still figuring out how to put in the right policies and how to protect the environment.
Dell has made many acquisitions in recent years. Are there any on the table now, and have any companies in the Middle East caught your attention?
We never disclose any activity, but we're always evaluating on a global scale. We certainly don't have anything announced for the Middle East, but we look everywhere for technology, so we're not restricting ourselves to any one geography.
How do you see Dell's rate of acquisitions changing in the future?
No real change. We've talked about our wherewithal to do eight to ten per year, and we've talked about them as relatively small in dollar size. And that really hasn't changed. We certainly have the balance sheet, and cashflow to do that. It depends if we find the right assets that fit the strategic needs of the business. But we're certainly looking to stay active.
What kind of businesses are you targeting for future acquisitions?
The areas are pretty consistent with what we've been doing. They're very infrastructure-orientated; they have to do with managing infrastructure, securing infrastructures, data management, we've done a lot in the storage area.
In August, Dell revised its revenues outlook downwards for this year. Is the outlook for the Middle East region similarly gloomy?
Our downward revision was definitely related to economic growth, which is coming down around the world. The Middle East is a bit healthier. We continue to see growth here. And the outlook is a little more encouraging in the Middle East than in other parts of the world. So while there is a slowdown [in growth] everywhere including in the Middle East, comparatively speaking this is a healthier part of the world right now for technology spend. The infrastructure build-out continues here [and] defence spending continues to be healthy. So all these factors usually require a lot of technology to drive them. And that's what keeps the technology spend at a healthy rate.
You have 11 offices in the region, in countries such as the UAE and Saudi Arabia. Do you plan to expand your physical presence regionally to meet competition from rivals?
It's not just to meet competition. There's great demand from our customers to be in these locations. So we are always expanding. We've been adding cities throughout the Middle East, Asia and Eastern Europe for a number of years now. Twenty-eight per cent of Dell's revenue comes from emerging countries, which is quite a big expansion in growth. Half the revenue comes from outside of the US. So a lot of our growth initiatives are aimed at emerging markets.