DELL reinvents business model

Firm aims to beat IBM, HP in Korea

By Kim Yoo-chul

DELL has been one of the major players in the domestic personal computer (PC) market. Despite numerous challenges, the U.S. giant has managed to stay the course.

However, the company has long been lagging behind its rivals IBM and Hewlett-Packard (HP) in the Korean market.

Seemingly, DELL Korea CEO Peter Marrs envisions a different picture. He may aim to break such industrial hierarchy by strengthening its foothold in Korea because he believes that Korea has great growth potential. He aims to more than double its sales here to 1 trillion won by 2015 by reinventing the firm’s business model with a focus on its enterprise solutions-related business.

DELL is the world’s fourth-biggest PC manufacturer and has been involved in the business for the past 28 years. But it has enhanced a business for corporations _ a very lucrative market that’s worth more than $4 trillion, globally.

``Not only in the global market, but also in Korea enterprise market, positive reviews on DELL’s product are dominant and it was reflected in the sales results,’’ said Marrs in an interview with The Korea Times at his office in downtown Seoul, Tuesday.

He believes that the consumer market such as desktop and laptop PCs isn’t healthy and the enterprise business has much more growth potential which is worth more attention.

``DELL Korea will soon follow IBM and HP (in business model),’’ he said

His comments can be taken as a sign that the company will compete with IBM and HP in the enterprise market and steal their market shares to become a leader.

DELL, headquartered in Round Rock, Texas, the United States, aims to reap 1 trillion won or some $900 million in sales from Korea by 2015, the senior executive said, adding its Korean operation saw a 10 percent increase in the first quarter of this year from its enterprise solutions. It reported 400 billion in sales last year.

Marrs said that DELL wants current alliances with top Korean tech giants such as Samsung and LG Electronics as well as leading telecom firms to be strengthened.

``The Korean IT market is very important and the rapid growth of which lies in the popularity of DELL’s hardware and solutions used by most Korean web portals, communication service providers including KT and other large companies,’’ he said. Korea is DELL’s main part supplier with 7 billion won sales by volume.

The executive added that the company is in negotiations with several Korean companies to add up its new channels and local partners. ``We are now expanding our indirect channels,’’ he said.

Currently, DELL has been waging an uphill battle to diversify its revenue base from PCs to become an influential player in the data equipment market and other IT services. It’s been facing stiff competition with IBM and HP.

``The only thing is that business in Korea has been increased every year and we expect another good year as well even though the world economy isn’t good,’’ he said.

``DELL has been expanding the domestic service network and giving tailored services that actively reflect local needs of the Korean corporate clients as well as individual consumers. We are planning to further spread our services to the consulting area by continuously reinforcing our services, here,’’ Marrs said.

Marrs denied speculations that the computing giant may start its mobile business. ``There is no plan to launch a mobile business in South Korea,’’ he said.

Amid an era of ``connected devices’’ such as smartphones and tablets, the demand for traditional computers is decreasing. JP Morgan Chase recently cut its target on major PC companies that include DELL and its biggest rival HP, citing weak information and technology (IT) spending overseas among other factors.

Although the U.S.-based investment bank cited uncertain growth in China, Marrs said its Korea business is safe to offset falling business momentum thanks to good responses of its competitive solutions products.

A growing number of companies have been grappling with fewer budgets for information technology spending because slow economic growth curtails spending.

But experts say spending for technologies will swell over the long-term as companies have been required to upgrade systems, connect to the internet cloud, or begin to make better use of user data to boost efficiency and cut costs.

``DELL is focused on making decisions for the long-term success of the company and becoming the best in customer service and support. Once we get these in line, market share gains will follow,’’ Marrs said, adding it’s been strengthening its after-sales (AS) policies and distribution channels as a part of its enhanced localized business strategy.

``DELL was the first provider that offered compelete cover service that covered even customers’ mistake and provide AS or exchange for free, and next-day visit service. We are doing better,’’ said the executive.