Glance quickly at Dell’s channel sales figures for PCs and peripherals in the first quarter of its current fiscal year, and you could easily conclude the IT market’s long hot streak in purchases of desktops, laptops, webcams, and other work-from-home gear has finally ended. Look more closely, however, and what you see is incredible growth becoming merely good.
“The demand environment is still pretty robust,” says Cheryl Cook, senior vice president of global partner marketing for Dell Technologies.
Indeed, while worldwide client hardware orders through the channel for Q1, which ended in April, were up just 1% on an annualized basis, that’s in comparison to a quarter one year ago in which orders soared 21%. Thanks to the apparently permanent trend toward hybrid work spurred by the coronavirus pandemic, Cook adds, there’s room for further growth ahead.
“We actually think that the total addressable market has kind of been reset to a higher level,” she says. In the era of “do anything from anywhere” computing, Cook notes, employees who needed one PC, monitor, and keyboard at the office now often need one of each there and another at home, and workers who shared a single desktop at home with their spouse and kids now need separate devices for everyone.
For Dell at least, most of the resulting growth is concentrated in the commercial PC and premium consumer segments. “That’s really where the lion’s share of our business comes from today,” Cook notes. “It’s where we continue to innovate and where we continue to invest.” Dell most recently unveiled new commercial PCs in March and April.
For Dell as a whole, commercial and consumer client revenue, both through partners and direct to buyers, climbed 17% in Q1. That’s comparable to recent numbers from Lenovo, which saw global client hardware revenue rise 18% in its latest quarter. HP, meanwhile, reported 9% growth in personal system sales during the fiscal quarter it concluded in April.
If Dell’s client business is slowly coming to Earth after an exceptional two years, its infrastructure business remains solid. Server orders through the channel, for example, were up 23% year over year in Q1. That’s down from the 38% growth the company reported in its previous quarter, but up from the 12% growth it recorded a year ago.
“Infrastructure has never been more top of mind,” Cook says. “There’s just a lot of modernization efforts underway.” Much of it, she continues, is closely associated with the same hybrid work arrangements driving client sales.
“While the world really prioritized work remote, learn remote, and enabling the whole workforce to go remote we’re definitely seeing a lot of energy being applied on building out the infrastructure to securely support those environments,” Cook explains.
Hybrid cloud deployments spanning onsite and offsite resources are also fueling infrastructure spending, she adds. “All of this unlocks a tremendous amount of demand and opportunity for managing a complex multi-cloud infrastructure environment, no matter where it resides.”
Dell introduced a range of multi-cloud services in May during its Dell Technologies World conference in response to that dynamic, as well as Project Alpine, an effort to connect on-premises storage resources to editions of Dell’s file, block, and object storage software running in Amazon Web Services, Microsoft Azure, and Google Cloud Platform.
“You can burst for disaster recovery or backup into the public cloud and vice versa back on premise,” Cook says.
Together, Dell’s channel sales in client and infrastructure added up to a 7% increase in order revenue overall, and a 13% increase in partner rebates. The company’s channel business worldwide across the last four quarters adds up to some $60 billion. Inflation, rising interest rates, continued supply chain challenges, and recession fears make forecasting what the next four quarters will look like difficult, however.
“There are definite signs of some uncertainties that we just can’t completely predict around us,” Cook says.
