New Dell PCs target emerging markets

August 27, 2008 11:37:07 AM PDT
Dell Inc. unveiled four low-cost computer models for China, India and other emerging economies Wednesday in a new bid to tap the potential of high-growth markets outside the United States. The two notebook and two desktop PCs are the first Dell models designed especially for emerging markets, said Steve Felice, the U.S. computer maker's president for the Asia-Pacific. They are meant for small-business users and are to be sold in 20 countries across Asia, Africa and Latin America.

Strong sales in Asia helped Dell turn in better-than-expected results in the last quarter despite a slowing U.S. economy. It is due to report its latest quarterly results after the U.S. markets close Thursday, and analysts are watching whether it can maintain its growth pace.

"Our success is going to be largely dependent on our ability to expand globally," Felice said in an interview.

Dell and rivals Hewlett-Packard Co., Taiwan-based Acer Inc. and China's Lenovo Group are expanding aggressively in emerging economies as sales growth in the United States and other developed markets slows.

Dell's first-quarter sales in China, India, Russia and Brazil - markets known collectively as BRIC - grew by 58 percent, about 10 times the U.S. rate, Felice said. He said Dell expects 20-30 percent annual growth in those markets in coming years.

Prices for the new Vestro notebooks will start at 3,299 yuan ($475) and for the desktop PCs at 2,999 yuan ($440).

Dell, based in Round Rock, Texas, broke with its usual development and marketing strategy for its latest products, Felice said.

"We used to design products for global requirements and distribute the same product globally," he said. "In this situation, we started with talking to emerging country customers, designing a product for emerging countries, and our initial launch of the product is only in emerging countries. That's a big departure in our strategy."

The new Dell models were created by a Shanghai design center set up to focus on emerging markets, Felice said.

The move reflects a growing focus by global computer, automobile, consumer goods and other companies on creating products for increasingly prosperous customers in China, India and other emerging economies.

Beijing-based Lenovo, which acquired IBM Corp.'s PC unit in 2005, is targeting China's vast but poor rural market with a basic PC released last year and priced as low as 1,499 yuan ($220).

According to Felice, industry forecasts say China's computer sales should grow from 50 million units last year to 500 million by 2015, or double that year's projected U.S. sales.

Dell built its U.S. business with Internet- and phone-based direct sales but has added retail distribution in China and elsewhere to reach more buyers.

In China, its computers are sold in 2,700 outlets of the Gome and Suning electronics store chains, which Felice said account for about half of Dell's Chinese sales. He said Dell has a total of about 13,000 retail outlets worldwide.

"These economies are growing so fast that we don't want to miss out on the opportunity," Felice said. "But if we just use the direct model, it might take too long to get there."

Dell is trying to expand its presence in China outside Beijing, Shanghai and other big eastern cities and sees 50 percent of potential sales in small, inland cities, Felice said.

"We're getting out there as fast as we can," he said.

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