Dell bets on continued home working to drive PC demand

by Jeremy

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Dell has reported a 9% increase in revenue for the fourth quarter of 2020 to $26.1bn, driven mainly by the strong growth in its Client Solutions Group (CSG) and VMware businesses.

CSG delivered record revenue for the fourth quarter of $13.8bn, up 17% year over year. This was driven by $9.9bn in commercial revenue, representing a 16% increase, and $3.8bn in consumer revenue, which is a 19% increase.

VMware’s subscription as a service reported revenue growth of 27% and revenue for the fourth quarter of $3.3bn.

“In the past year, our team rallied to support our customers and partners worldwide as technology played a central role in keeping our society, economy and lives moving forward,” said Jeff Clarke, chief operating officer at Dell Technologies.

“We generated record revenue of $94.2bn this year by helping customers adapt to new work-and-learn-from-anywhere realities, and are in an advantaged position to capitalise on the projected mid-single digits growth in IT spending in 2021.”

The company said it had experienced strong demand in commercial PCs, which posted unit growth of 11%. Commercial revenue was up 3% to $35.4bn, according to a transcript of the earnings call posted on the Seeking Alpha financial blogging site.

“Orders for our commercial notebooks were up 46% on a unit basis and 28% on an orders revenue basis, while orders revenue for commercial Chromebooks was up triple digits,” said Clarke.

Dell stated that servers and networking revenue for the year was $16.5bn, down 4%, but Clarke said that server demand improved in the fourth quarter, with PowerEdge orders up “mid-single digits”.

Similarly, Dell reported a decline in storage. “Our storage revenue was $16.1bn, down 4%, but we did see demand growth in key areas. PowerMax, hyperconverged infrastructure and PowerProtect Data Domain all saw solid growth during the year on an orders basis. Our midrange storage business returned to growth in the fourth quarter, driven by accelerated adoption of PowerStore,” said Clarke.

Dell is betting on people continuing to buy PCs for home schooling and remote work from home. Clarke said he did not believe the trend would slow down post-pandemic or as people start going back to the office.

“We’re going to continue to see an environment where people will do more work and more of their activities away from the office, driving demand for PCs, which have become essential in this type of work and consumer environment.. The PC has become one of – if not the most – essential device in this work-from-anywhere, do-from-anywhere environment that we’re in today,” he added.

Regarding VMware, Dell said it has seen strong growth in 5G networking. “We are on the cusp of widespread 5G connectivity driving real-time, automated and intelligent outcomes at the edge. This will drive an estimated $700bn in cumulative spend on edge IT infrastructure and datacenters within the decade,” Clarke said.

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