Dell Fires Back at HP with Services Offensive

By Stan Gibson  |  Posted 2002-10-09 Print this article Print

Online exclusive: A day after HP's Fiorina scoffed at Dell's printer plans, Michael Dell told the crowd at Gartner's gathering that his company plans to turn up the heat on professional services.

LAKE BUENA VISTA, Fla.—Don't look now, Carly Fiorina: Michael Dell is taking aim at the other heart of your business.

A day after the chairwoman of Hewlett-Packard Co. said Dell Computer's plan to enter the printer business "doesn't send us shaking in our boots," the namesake and founder of Dell said his company planned to bring the same kind of efficiencies to the provision of professional services as it has to the delivery of hardware and software.

"Dell will innovate in services, creating a new kind of services model," the now-37-year-old chief of an 18.5-year-old computer manufacturer and services seller said in an on-stage interview at the Gartner Symposium/ITxpo here.

That model will include:

  • A focus on designing and building computers at its factories in ways that lead to cheaper and easier means of installing networks of machines in the field
  • "Semi-custom" services for responding to enterprise customers' needs
  • A variety of support and maintenance packages that provide anything from phone response to problems to "live-in" personnel on customers' premises.
  • Remote diagnostics and remote resolution of problems that is "superior to those of other companies with other models"

    All of which will be delivered at lower cost than competitors, such as Hewlett-Packard. Dell noted that his company's operating expenses in the second quarter were 10 percent of its $8.5 billion in revenue.

    Actually, the figure reported by the company was 9.9 percent, matching the company record set in the first quarter. That is half the rate at Hewlett-Packard. The Palo Alto, Calif., computer maker and services competitor said that, in its third quarter, pro forma operating expenses were up sequentially from 21.0% to 22.5% of its revenue of $16.5 billion.

    These results reflect the combination of HP with Compaq Computer of Houston, which it absorbed. HP Services, which include support, consulting, integration and so-called "managed services," reported third-quarter revenue of $3.0 billion, down 7% from a year ago.

    Nonetheless, that is nearly four times the size of Dell's services business, which its chief executive pegged at $3.5 billion a year, or 10 percent of overall annual revenue. But Dell said he expects to lower cost, drive efficiency and still make a profit.

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    Stan Gibson is Executive Editor of eWEEK. In addition to taking part in Ziff Davis eSeminars and taking charge of special editorial projects, his columns and editorials appear regularly in both the print and online editions of eWEEK. He is chairman of eWEEK's Editorial Board, which received the 1999 Jesse H. Neal Award of the American Business Press. In ten years at eWEEK, Gibson has served eWEEK (formerly PC Week) as Executive Editor/eBiz Strategies, Deputy News Editor, Networking Editor, Assignment Editor and Department Editor. His Webcast program, 'Take Down,' appeared on Zcast.tv. He has appeared on many radio and television programs including TechTV, CNBC, PBS, WBZ-Boston, WEVD New York and New England Cable News. Gibson has appeared as keynoter at many conferences, including CAMP Expo, Society for Information Management, and the Technology Managers Forum. A 19-year veteran covering information technology, he was previously News Editor at Communications Week and was Software Editor and Systems Editor at Computerworld.

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