Dell: Hitting the $80bn target

The company is already expected to hit its previous goal of $60bn in annual revenue during calendar 2006 — a year earlier than planned — and several Wall Street analysts say Dell will reach its $80bn target over a three-year time frame. That would translate into a compound annual growth rate of around 18 percent.

Dell executives did not offer much in the way of specifics about new markets that might help it hit those goals. Rollins has previously mentioned digital cameras, and there has been talk of mobile phones. But Rollins touched on neither on Thursday.

And for all the talk about no longer being a PC company, Rollins did acknowledge that PCs are still a vital part of Dell's business. The company ranked as the world's largest PC maker during the fourth quarter.

Analysts also agree that PCs are still an important market for Dell.

"For the foreseeable future... PCs will remain the dominant revenue driver in Dell's business," said Brooks Gray, an analyst with Technology Business Research.

Gray predicts that Dell will hit the $80bn mark during calendar year 2009 and that even at that time about 59 percent of its revenue will come from PCs.

The direct approach
Dell says its low manufacturing costs and direct-sales model give it an advantage over competitors such as HP by allowing it to sell PCs, printers, televisions and other products at lower prices. Dell's model mainly involves selling products and services to customers using online or telephone sales and shipping them straight to offices or residences.

Main rivals HP and IBM — whose PCs will soon be in the hands of Lenovo — use hybrid models that combine direct and indirect sales, adding a network of so-called solution providers that sell PCs, servers, services and related software to businesses and take a cut. One the consumer side, HP works with retailers that sell to individuals and small businesses.

Some critics have said Dell should have more of a retail presence or work more closely with business resellers. But the company has so far limited its efforts to placing a small number of kiosks in shopping malls to display its consumer products. Dell, which killed its white-box PC program earlier this year, continues to works with resellers that can offer its brand-name products. But it does so without fanfare. It also maintains a reseller program for emerging markets in Eastern Europe, the Middle East and Africa, but it places most of its emphasis on direct sales.

Elements of the way Dell aims to reach the $80bn mark include boosting sales of servers by expanding the types of machines it offers. It also plans to increase its printing and laptop business by pursuing greater market share and lower prices, respectively, all as part of a strategy it calls "define, grow and extend".