Dell South Africa reports annual revenue growth of 100%

Dell South Africa, part of world leading direct computer sales company Dell Computer Corporation, has recorded in excess of 100% revenue growth compared with the same period last year. This growth has seen Dell become the third largest PC company in South Africa in terms of revenue.

According to BMI Tech-Knowledge Dell has grown 5,4 times faster than the industry average year on year. The local market has seen growth of 31% in the last 12 months.

These results follow only days after Dell Computer Corporation in the US (Nasdaq:DELL) reported an earnings per share increase of 65 percent to $0.28 for the quarter ended 1 November 1998. Revenue grew 51 percent to $4.8 billion, as the company for the first time surpassed $10 million a day in customer sales via www.dell.com.

According to Michael Dell, chairman and Chief Executive Officer of Dell Computer, the strong quarterly results have demonstrated the consistency of Dell`s direct model. Says Dell "our business continued to grow profitably in all customer segments and regions around the world through the Dell direct model. Our focused execution has enabled us to achieve No. 1 position in profitability in the computer systems industry. We were also No. 1 in revenue and unit shipment growth among the top 10 computer systems companies, growing at more than five times the industry rate worldwide."

Internet sales also grew exponentially with Dell becoming the largest on-line merchant. "For the first time, Dell surpassed $10 million a day in worldwide sales to customers via the Internet at www.dell.com, achieving a dramatic sales surge in corporate relationship accounts. Equivalent to an annual run rate of more than $3.7 billion, this is more than triple the on-line sales level achieved by Dell a year ago," says Michael Dell.

"Growth in the South African market reflected the worldwide trend being largely driven by the direct model," says Gareth Martin, Managing Director of Dell Computer SA. "Dell has introduced a significant reduction in total cost of ownership, has improved levels of customer service through the speedy delivery of custom-built PC`s, has boosted accountability offered outstanding support and has introduced customisation to the industry.

"Our industry has historically neglected the customer," says Martin. "So when Dell introduced the direct model three years ago it was a turning point in the industry locally. A fact that is readily apparent in Dell`s 100% year on year growth since 1995."

"Compaq recently announced its intention to implement a new direct sales initiative early in 1999," says Martin "We`re flattered by these efforts to replicate and redefine the direct approach. In essence our competitors are endorsing the inherent advantages of our direct business model. However we believe there are numerous competitive advantages inherent in Dell`s model which cannot be achieved by adopting pieces of "direct" or trying to will yourself to behave like a direct organisation.

While the South African operation of Dell Computer has seen good growth in sales of desktops and laptops in Q4, the systems company has seen a dramatic increase in demand for its servers. "Our pricing structure on servers has shaken the industry," says Martin. "We are selling product at significantly less than competitors offering comparable products."

The local operation has also become the country`s most aggressive on-line internet trader boasting sales locally of close to R90 million for the 1998 financial year. "Dell`s Internet business at www.dell.co.za is thriving as South African companies are increasingly logging on to the advantages of having their own individualised product configurations and pricing, order and inventory tracking through detailed reports, assembly and delivery progress tracking," says Martin. "Customer sales have now expanded beyond our corporate customer base into sales and service to business and government customers."

Dell Computer plans to use the internet as the next battleground for market share. "We will automate and customise service in much the same way as we have streamlined and customised PC production," says Martin.