Dell sees no end to price war, PC innovation

PC prices won’t jump in the near term and innovation of the PC hasn’t stopped, said Paul Bell, president of Dell Computer Co. in Europe, the Middle East and Africa (EMEA) on Tuesday.

Bell responded to Michael Capellas, chairman and chief executive officer (CEO) of Compaq Computer Corp., who on Monday said in a keynote address at International Data Corp.’s (IDC) European IT Forum in Monaco that “brutal pricing” would last and “PC innovation would stagnate” [see story – Compaq’s Capellas sees bumpy ride ahead].

“We expect great bargains for a while. It is a great time to buy. Pricing feels less brutal to us because it still is a profitable business. You will continue to see massive amounts of innovation – if nothing else, in size: smaller and more portable. The PC is changing more rapidly now than in the previous ten years,” Bell said in an interview.

Capellas suggested Compaq is moving away from PCs, saying his company doesn’t strive for leadership “in the past market,” but is focusing on tomorrow’s next-generation devices.

PCs aren’t history, Bell responded.

“We don’t have to turn around and evacuate the client side – the desktops and the notebooks – because they are very healthy businesses for us. They’re in the past for the competition because they haven’t figured out a business model that works. The PC is a very solid business, there is strong demand for desktops,” Bell responded.

“It is important for our customers that we’re not badmouthing PCs. Our customers want to use them and want to buy them. We’re investing in that area. With other people cutting investment, customers are going to see where they will get a better experience,” he added.

Carly Fiorina, the Hewlett-Packard Co. chairman and CEO, took her own swipe at Dell on Monday in a presentation defending her company’s proposed takeover of Compaq. She claimed that Dell, with its focus on volume and velocity, wouldn’t survive in the long term as it lacks resources for research and development, sales and marketing.

“We’re 17 years old, and in our industry, that is the long term and we’re number one,” Bell said.

“Our current and historical growth shows that we can compete, we’re continuing to gain market share and we’re earning most of the profits in the industry. Whenever someone says that we can’t keep growing, it is hard to understand the logic of that,” Bell responded.

Looking at the economy in general, Bell drew a comparison with the annual Formula 1 race that is held here.

“It feels like we are in one of those hairpin curves. Like Monaco, the new economy has proven a difficult course,” he said.

Dell has seen its growth rate drop from 60 per cent in recent years to an expected 20 percent this year, according to Bell.

“The market is growing slower, but it is still a very big market. We are hopeful that Europe can be one of the factors of leading us forward and creating new growth,” he said.

Dell, in Round Rock, Tex., can be reached at