Dell’s India Strategy Helps Increase Profits
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Dell Inc., maligned by analysts in America for relying too long on selling personal computers over the Internet, is making headway with that old strategy in what may prove a more important market: India.
PC purchases are rising more than three times faster in India than America, and Dell’s market share there has more than doubled in the past three years, researcher IDC said. That probably helped drive a 7.9% sales gain at Dell last quarter to $15.9 billion, according to the average estimate in a Bloomberg survey.
Dell is gaining market share because much of the demand in India comes from corporations, which are increasingly bypassing resellers and buying directly over the phone or the Internet and from sales staff. Focusing on developing countries may help Round Rock, Texas-based Dell surmount an economic slump in America, which has pinched technology budgets.
“Dell’s direct-sales method gives it the inside track with large, sophisticated enterprises,” a Boston-based analyst with Cowen & Co., Louis Miscioscia, said. He advises investors to buy the shares and doesn’t own any.
Hewlett-Packard Co. also is having a strong run in India, boosting market share to 18.4% in the first quarter from 13.1% in the same period in 2005, according to IDC. Dell’s share of Indian PC shipments climbed to 7.6% from 3.1%. Both have won customers from India’s HCL Technologies Ltd. and smaller competitors.