Dell Technologies Is Focused On 'Outperforming The Market' Amid Strong Q3 PC Results

Dell Technologies isn't counting on Microsoft's Windows 10 operating system to drive PC sales anytime soon, but the company's CFO expects to continue to take market share from HP Inc. and Lenovo.

"We are long-term bullish on Win10, but expectations for refresh cycle are a bit more muted, probably more in the second half of next year rather than [the] first half," Dell Technologies CFO Tom Sweet said during a conference call to discuss the company's third-quarter earnings Thursday. "We haven't been able to attribute significant buying patterns as a result of Win10 at this time."

Sweet's assessment came as Dell manages to gain market share in an increasingly challenging PC market dominated by three major players: HP Inc., Dell, and Lenovo. By Sweet's estimation, the market is set for "gradual improvement" after "hitting a trough last year."

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"Our focus is on outperforming the market and taking share as we grow our footprint," Sweet said.

That strategy seemed to play out in the third quarter. According to IDC data, Dell gained the most market share of any major PC vendor during the quarter, posting 6.2 percent share growth in shipments worldwide. That's nearly double HP Inc.'s growth total, and it came as global PC leader Lenovo lost 3.3 percent of share.

In the U.S., Dell is locked in a close, back-and-forth battle for PC supremacy with HP Inc., and notched 10.8 percent market share growth in shipments in the third quarter compared to HP's 5.8 percent growth. HP, however, was the market leader during the quarter with a nearly 30 percent market share.

"We expect consolidation to continue, which is helpful to us and some of our larger competitors," Sweet said.

Dell Technologies' Client Solutions Group, which includes its PC business, posted $9.2 billion in sales for the third quarter, up 3.2 percent year-over-year, a result Sweet called "better than expected."

PCs make up a little more than half of Tempe, Ariz.-based solution provider MicroAge's business, said Mark McKeever, the company's principal. MicroAge, he said, makes a 10 percent, or better, margin in its PC business, which brings in about $30 million in sales annually. He said that business grows at a pace that is even with, or slightly ahead of MicroAge's overall corporate growth.

For McKeever, the market's struggles don't mean disaster for the PC, but the shrinking PC market does require resellers to adjust the way they think about selling. He said "there aren't enough new features" in Windows 10 to make it a market driver.

"People still need [PCs]. People still buy them," McKeever said. "It's not as sexy as it was before, but good clients, when they need those things, you work the deal. You can still make margin on it, and it's not a complicated sale. There's not hype around it. There's all this talk about the PC is dead. Maybe it's not going to grow double digits anymore, but people are still going to need them. It's not on a three-year cycle. People can get a lot more time out of it. People are upgrading workstations that are six years old. You couldn't say that in the '90s."

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