Dell Vows Its Unwavering Commitment To The PC Pricing War

Dell CEO Kevin Rollins suggested to investors earlier this month that his company wouldn't back down from its strategy of underpricing its competition as it works to win back PC market share.

Speaking at the Bear Stearns Technology Conference in New York, Rollins said Dell is on the right track toward rebounding from several fiscally subpar quarters and that the Round Rock, Texas, company is still beating competitors on price.

"There are probably a few areas where we could have been more effective in managing component costs, and we will be rebuilding that capability," Rollins said in remarks that were Webcast. "I'm pretty confident ... the [pricing] gap will be sufficient for us to continue to grow share. Our competitors have been better and closed the gap, [but] the gap is still there."

Rivals such as Lenovo have vowed to remain cost-competitive as a way to snare PC market share, and Hewlett-Packard has virtually been in lockstep on price aggressiveness as well. Rollins repeated recent assertions by Dell executives that the company has taken steps to fix pricing issues, address service-and-support complaints and reposition itself in the market with new products.

"I'm confident in the large markets where we make money, we'll be just fine," Rollins said. "Our goal now is to focus: cost competitiveness [and] making the investments in the right places, right markets and right areas—service and support, technological advancement."

Rollins pointed to new Dell server announcements, the company's pending release of servers based on Advanced Micro Devices' Opteron processors and plans this year to "launch new products across every category we have."

The Dell CEO also downplayed the impact of the delay of Microsoft's upcoming Windows Vista operating system, which is slated for general availability in early 2007. He said Microsoft and Dell have options available to goose sales ahead of the launch, including coupons for upgrades.

"Dual-core [systems], flat panels, storage and wireless technology ... I still think customers will want to buy those [this year]," Rollins said.

Solution providers have long been skeptical of Dell's ability to sustain its 1990s rate of growth on its low-cost-provider model, and now that the direct PC maker is attempting to come back from a slump there is no evidence they've changed their thinking.

"That's all [price] they have, nothing else," said Felise Katz, CEO of PKA Technologies, an HP enterprise solution provider in Suffern, N.Y. Customers aren't looking at price, she said. "Customers are looking at technology. They are saying to me, 'Price is not the No. 1 issue.' " Katz said whether Dell's move to use Opteron processors in its systems later this year would have a competitive impact was "an interesting question," but said she partners with HP because there is more involved in rolling out solutions.

"It's not just the chip," Katz said. "It's what you do around the chip."