Dell: We and our customers understand the supply constraints now. The 'wildcard is logistics'

Over at rival HP, the story is more about building too many Chromebooks and watching demand for them ebb away

The humble PC continues to bring home the bacon for Dell, with shipments to corporate customers going through the roof, in spite of previous worries about shortages and price hikes. But things are less rosy at HP, which has been caught out by the recent collapse in Chromebook orders.

Dell reported a 21 per cent year-on-year jump in group revenues to $28.394bn for its Q3 ended 29 October. Within this, the Client Solutions Group booked in $16.5bn of sales, up 35 per cent, including $12.3bn from biz PC sales (up 40 per cent) and $4.3bn from Consumer (up 21 per cent).

"Approximately 80 per cent of the industry's revenue and nearly all of the industry's revenue growth has come from commercial PCs and premium consumer PCs, and that is where we are focused," said Jeff Clarke, co-chief operating officer.

He also pointed out Dell's relatively limited exposure to consumers, and more specifically Chromebooks – a segment of the market took a dive in recent months due to market saturation, particularly among US consumers and student buyers.

The work from home and learn from home set-ups, the "usage pattern of hybrid workers", the "re-entry of workers back into the office", along with the "addition of Windows 11 [and] an aged installed base means the "demand environment we're seeing today, we believe, continues into next year", said Dell's Clarke.

That's not to say that component shortages won't continue to be a massive hurdle for all tech manufacturers. The COO highlighted Dell's scale and length of relations in the supply chain.

The demand dynamics are "well understood" by customers, he said: "We just went through our largest quarter-over-quarter cost increase that we have seen."

Dell is tracking 27 categories across its portfolio, including codecs, audio amplifiers, power ICs, sensor ICs, microcontrollers, FPGAs, and so on. Although supplies will remain a challenge, freight seems to be more of a headache.

"The wildcard for us is the costs that we are continuing to work on in logistics. The logistics cost environment today is pretty challenging. Inbound freight, the next guided freight, the fact that we're expediting more things, we've shifted from less ocean to more air. That combination of things, making sure that we understand those input costs into our pricing models, I think, is clearly the challenge that we look to in Q4," said Clarke.

Dell's Infrastructure Solutions Group – the other major portion of business – grew 5 per cent to $8.4bn: Storage was up 1 per cent to $3.9bn, and Servers and Networking grew 9 per cent to $4.5bn. VMware reported its last quarter under Dell Tech's ownership – those results are here.

At HP, which reported [PDF] numbers for its Q4 of fiscal 2022 ended 31 October, revenue grew at a comparatively more measured 9.3 per cent to $16.7bn. Personal systems were up 13 per cent to $11.795bn and printing up was 1 per cent to $4.879bn.

"Our disciplined execution and pricing strategy allowed us to effectively manage cost and component headwinds," said CEO Enrique Lores. "A big part of our success is the improved mix we are driving given our leadership in the commercial PC market. As more offices reopen, we led our shift toward Windows based commercial products where we saw the strongest demand and highest profitability.

"We expect component shortages, particularly in IC, to persist into at least the first half of '22," he added. "We continue to increase our direct engagement with Tier 2 and Tier 3 suppliers. We have expanded long-term agreements to secure capacity."

The North American PC market declined in calendar Q3, in large because of the drop-off in Chromebooks. HP is one of the major suppliers of these devices and as such saw its US business shrink. As a result, although HP made more money from the premium units it shifted, volumes were down across its PC division in its Q4 by 9 per cent.

For the current quarter, HP's Q1, CFO Marie Myers said: "We expect the component shortages, as well as manufacturing port and transit disruptions, will continue to constrain revenue due to the ongoing pandemic in many parts of the world." ®

Similar topics

Other stories you might like

  • India reveals home-grown server that won't worry the leading edge

    And a National Blockchain Strategy that calls for gov to host BaaS

    India's government has revealed a home-grown server design that is unlikely to threaten the pacesetters of high tech, but (it hopes) will attract domestic buyers and manufacturers and help to kickstart the nation's hardware industry.

    The "Rudra" design is a two-socket server that can run Intel's Cascade Lake Xeons. The machines are offered in 1U or 2U form factors, each at half-width. A pair of GPUs can be equipped, as can DDR4 RAM.

    Cascade Lake emerged in 2019 and has since been superseded by the Ice Lake architecture launched in April 2021. Indian authorities know Rudra is off the pace, and said a new design capable of supporting four GPUs is already in the works with a reveal planned for June 2022.

    Continue reading
  • Prisons transcribe private phone calls with inmates using speech-to-text AI

    Plus: A drug designed by machine learning algorithms to treat liver disease reaches human clinical trials and more

    In brief Prisons around the US are installing AI speech-to-text models to automatically transcribe conversations with inmates during their phone calls.

    A series of contracts and emails from eight different states revealed how Verus, an AI application developed by LEO Technologies and based on a speech-to-text system offered by Amazon, was used to eavesdrop on prisoners’ phone calls.

    In a sales pitch, LEO’s CEO James Sexton told officials working for a jail in Cook County, Illinois, that one of its customers in Calhoun County, Alabama, uses the software to protect prisons from getting sued, according to an investigation by the Thomson Reuters Foundation.

    Continue reading
  • Battlefield 2042: Please don't be the death knell of the franchise, please don't be the death knell of the franchise

    Another terrible launch, but DICE is already working on improvements

    The RPG Greetings, traveller, and welcome back to The Register Plays Games, our monthly gaming column. Since the last edition on New World, we hit level cap and the "endgame". Around this time, item duping exploits became rife and every attempt Amazon Games made to fix it just broke something else. The post-level 60 "watermark" system for gear drops is also infuriating and tedious, but not something we were able to address in the column. So bear these things in mind if you were ever tempted. On that note, it's time to look at another newly released shit show – Battlefield 2042.

    I wanted to love Battlefield 2042, I really did. After the bum note of the first-person shooter (FPS) franchise's return to Second World War theatres with Battlefield V (2018), I stupidly assumed the next entry from EA-owned Swedish developer DICE would be a return to form. I was wrong.

    The multiplayer military FPS market is dominated by two forces: Activision's Call of Duty (COD) series and EA's Battlefield. Fans of each franchise are loyal to the point of zealotry with little crossover between player bases. Here's where I stand: COD jumped the shark with Modern Warfare 2 in 2009. It's flip-flopped from WW2 to present-day combat and back again, tried sci-fi, and even the Battle Royale trend with the free-to-play Call of Duty: Warzone (2020), which has been thoroughly ruined by hackers and developer inaction.

    Continue reading

Biting the hand that feeds IT © 1998–2021