Dell Hints At 'Product Lust' As Profit Rises

Michael Dell, in his first call with analysts since returning to the CEO spot in January, outlined his plan to return the company to financial health in a conference call Thursday.

"We now have the strongest executive leadership team in the industry," Dell claimed. He mentioned new notebooks, new systems designed specifically for small and mid-size businesses, rapid expansion of its new retail channel, and new plants the company opened this year in Brazil, India, and Poland that will get systems faster to global customers. He mentioned new acquisitions including Zing, Silverback, and ASAP, that expected to help the company expand its product portfolio.

But Dell executives also admitted a lingering problem for the company they're trying to solve: declining market share of PCs, as it loses business to Hewlett-Packard and others. One way Dell plans to do this is with new offerings that generate "product lust" among consumers, Dell said.

Earlier this month, Dell launched a premium desktop that will compete with Apple and Hewlett-Packard for the multimedia enthusiast. The XPS 420 is powered by Intel's Extreme brand of multi-core processors, and is available with either ATI or Nvidia graphics cards.

For its third fiscal quarter ended Sept. 30, Dell reported Thursday a net income of $766 million, up 27% from the same period last year, and revenues of $15.6 billion, a 9% increase. Dell executives have not discussed earnings with analysts since Aug. 2006 due to an accounting probe that was recently completed.

Among business customers, Dell is looking to distance itself from HP by focusing on simplification. "We look at technology different than our competitors," Dell said. "They thrive on complexity and their business model depends on it. We architect for simplification in our products, services and operations." As a result, that will "leave customers with more budget for innovation and improvements," he said.

Services is a big part of Dell's simplification play, and its getting many of those offerings by buying them. In an abrupt turnaround from its long-time organic growth strategy, Dell has acquired five companies in the past four months topped off by the Nov. 15 acquisition of Everdream Technologies.

The company provides an on-demand software service for managing corporate PCs. Dell sees Everdream complimenting its July acquisition of Silverback Technologies, a service delivery platform for remote monitoring of IT systems, and ASAP Software, software and services for deploying IT assets. Michael Dell said earlier this month the company plans to triple the size of his company's services business within three years.