Dell Technologies prides itself on its supply chain management prowess. But even it is having trouble sourcing components for PCs, servers, and storage arrays these days.
“We have parts of the supply chain where we’re constrained just like the rest of the industry is,” says Cheryl Cook, Dell’s senior vice president of global channel marketing, adding that responsibility for those constraints extends well beyond the much-discussed chip shortage.
“One thing we’ve all learned is a 35-cent component is as critical to building a finished product as the CPU is,” she notes. It may be a while too, Cook continues, before reduced access to needed parts stops being a problem.
“I think we’re going to continue to see it throughout the next year, honestly, and maybe into 2023 before it really kind of shakes itself out,” she says. “We’re just focused on what we can control.”
Same goes for the other economic headache making headlines at present, inflation, which has made building, shipping, and supporting IT equipment more expensive for manufacturers as well as consumers.
“I think the scale of the company helps us shoulder and buffer through some of that volatility a little better than some, but we’ve had to make adjustments and pass that on through as appropriate,” Cook notes.
None of those headaches stopped Dell from producing record results in its third, most recently completed fiscal quarter, however. Server sales through the channel soared 40% year over year, and sales of desktops, laptops, and other client devices jumped 41%. Even storage revenue through the channel, a soft spot in Dell’s numbers for a string of recent quarters, rose 12%, fueled by strong demand for products like the company’s midrange PowerStore line.
“The midrange part of the storage market is frankly what’s experiencing the highest growth of all the different price bands,” Cook says.
All that sales activity drove channel rebate payouts up 34% in the quarter. Longstanding product categories weren’t the only ones to produce big numbers either. Sales of embedded, edge computing, and other products through OEM partners were up 42% in Q3.
“There’s a lot of use cases and vertical applications that are locating and moving compute near where that data’s generated, and that absolutely lends itself to the type of work that we do in OEM,” Cook explains.
Though the depth and breadth of Dell’s portfolio deserve some of the credit for its recent momentum, according to Cook, so does the market’s continued appetite for new and more powerful hardware. “The overall demand environment in the entire industry is robust,” she says.
Office re-openings slowed but not stopped by the spread of the coronavirus’s omicron variant are helping keep demand strong among commercial buyers, Cook adds. “They’re stepping back in and some of their devices are three, four years old,” she notes. That said, Cook continues, mobile devices suitable for use both at home and the office remain the hot corner of the PC market.
“There’s no question that we’re seeing laptop sales eclipse desktop sales,” she says.
PC shipments across vendors were up 9.9% worldwide last year, according to Gartner, and up 13.5%, according to IDC. Both analysts expect that growth to slow in 2022, though not to pre-pandemic levels. That sounds about right to Cook as well.
“I don’t have a crystal ball personally, but I would be rather aligned to what they’re saying,” she states.
The fourth and final quarter of Dell’s 2022 fiscal year concludes this month. The company will outline plans for its partner program in the new year soon, Cook says.
