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HomeTechDell’s revenue growth hinges on enterprise hardware sales

Dell’s revenue growth hinges on enterprise hardware sales


As Dell Technologies continues to struggle with a sharp decline in PC sales, green shoots are appearing in its servers, storage and networking businesses.

While the company’s revenue for last year was recorded at $102.3 billion, up 1% year-over-year, fourth-quarter revenue fell 11% to $25 billion. Dell’s commercial and consumer divisions were hit the hardest during the quarter, with sales declining 17% and 40% respectively for those segments.

However, revenue in the company’s Infrastructure Solutions Group (ISG), which includes servers, storage devices and networking hardware, rose 7% in the fourth quarter. With sales of $9.9 billion, the ISG unit accounted for approximately 40% of Dell’s total sales during the quarter.

While underlying demand for PCs and servers remained weak, the company is seeing strong growth in its ISG unit, said Chuck Whitten, co-CEO of Dell. talking to analysts after the results were published.

“Specifically in ISG, we delivered record storage revenue of $5 billion, up 10%, including demand growth in PowerFlex, VxRail, Data Protection and PowerStore,” said Whitten. “We grew servers and networks by 5% in a challenging server demand environment by optimizing server shipments, along with strong attachments and growing ASPs, a clear indication that we continue to sell deeper into customers’ digital agendas.”

PC sales continue to fall

According to reports from Gartner, IDC and Canalys, PC sales fell more than 25% year-over-year in the last quarter of 2022, as did prices for the hardware that did sell.

For all of 2022, laptop and desktop sales are down about 16% compared to 2021, according to all three reports. Last year’s decline was somewhat offset by a near-historic year in PC sales in 2021, where year-over-year growth was around 15%.

Dell isn’t the only PC maker financially hit by the drop in device sales. Earlier this week, HP reported a 19% drop in sales for its last quarter, with commercial sales down 18% and consumer PC sales down 36%. Sales for the company’s personal systems division fell 24%.

John-David Lovelock, a vice president and analyst at Gartner, said after Gartner released its January 2023 IT spending forecast that due to the current inflationary economic situation, device sales are likely to remain flat for some time to come.

He explained that while Gartner had expected to see a decline in device spending due to the impact of inflation on consumer purchasing power, the refresh cycle is actually longer than expected, meaning companies like Dell and HP are closing their consumer and commercial businesses. probably won’t see it again. units rebound quickly any time.

“People are learning that they can hold on to a device longer and still be satisfied,” Lovelock said, noting that this trend is likely to continue into 2023 and into 2024, when Gartner expects some of the backlog in purchases to grow.

Whitten acknowledged that these obstacles were likely to persist into the next fiscal year. “Given that backdrop, we expect at least the first part of fiscal 2024 to remain challenging,” he said.

Copyright © 2023 IDG Communications, Inc.

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