Dell rides high in sales

By CHRIS BARTON

Dell celebrates its fifth year in New Zealand this month confident that it has snared the No 2 spot in PC market share for the third quarter.

Although official figures from research company IDC are not due for two weeks, general manager Ross Allan says Dell has sold about 9000 PCs in the quarter.



In the last quarter Dell was third, selling about 6300 PCs (7.6 per cent market share) - way behind second-ranked Hewlett Packard, which sold nearly 14,000 PCs.

Compaq sold the most PCs - just over 15,000. For Dell to take the No 2 position with about 9000 PCs means Hewlett Packard and Compaq would have to have had a significant drop in sales in the third quarter.

"I don't believe they will be No 2," says Hewlett Packard's consumer business general manager, Mike Carden. "If they're saying that on 9000 units, it's a fantasy claim."

Even if Dell does not make second place, it will be a very secure third ahead of IBM and indicates 45 per cent sequential growth from the second quarter.

Mr Allan also predicts Dell will show 40 per cent growth over last year in units sold during calendar 2000 - much more than the total PC market growth in NZ, tipped to be between 10 and 15 per cent.

Like many multinationals, Dell does not break out revenue figures for NZ, although Mr Allan is happy to say income is "currently north of $100 million" and represents a 25 per cent increase on last year.

Much of Dell's third-quarter success comes from a large workstation sale to the police call response centre, plus ongoing business with the Wellington City Council and Wilson & Horton.

Dell is also benefiting from "affinity marketing" programmes with Kiwi Dairy and ANZ Bank.

The deal with Kiwi Dairy allows farmers joining the company's internet portal fencepost.com to buy Dell PCs at preferential rates. Mr Allan says more than 1000 have taken advantage of the specials so far.

The deal is similar to ANZ's "at-home project," which sells cheap home PCs to ANZ staff. About 2000 have taken up the employee-buying offer in NZ.

The sales give Dell a backdoor entry into NZ's home-PC market, where it has lacked clout in the past.

Mr Allan attributes most of Dell's NZ success to the direct sales model.

"You can never undervalue the accountability of the direct relationship.

"One of the recurring themes we get from customers is 'dealing with you means one less supplier relationship that I have to worry about'."

The company has also held out longer than other major brands in lifting prices to compensate for the falling exchange rate.

Its prices go up between 5 and 8 per cent in early November.

Mr Allan says the turning point for Dell happened when there was a "raising of the bar" in the team, which has grown from five to seven over the five years.

"We just couldn't hire the people with the skill set we wanted to get market credibility.

"We started to attract them two years ago."

Key accounts helped too - ASB Bank and Ernst Young in the early days, and more recently Fletcher Challenge and Carter Holt Harvey.