Munich The recession is approaching and more and more companies are not buying new company computers. Instead, companies are increasingly renting modern PCs and notebooks. “Many of our customers are just looking at such models,” said Tom Sweet, CFO of the US computer manufacturer Dell, the Handelsblatt.
The manager explained that the companies could save themselves high one-off expenses. And: “Companies only have to pay for what they really need,” stressed Sweet. This is particularly important in uncertain times like these.
It is no coincidence that the American PC manufacturer is currently accommodating customers with financing and rental offers. The boom in computer purchases triggered by working from home during the pandemic is over. Warehouses are full and prices are falling.
According to market researchers, manufacturers delivered almost a fifth fewer devices in the third quarter than in the previous year. According to the experts at Gartner, the decline has never been so severe since office computers became the main means of work in the mid-1990s. According to the specialists, Dell’s sales fell by a good 21 percent, which is a little stronger than in the market as a whole.
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Many consumers have bought new equipment in the past two years and therefore no longer need it. According to Gartner, companies were also becoming increasingly hesitant: “On the corporate side, geopolitical and economic uncertainties led to more selective IT spending, and PCs were not at the top of the list of priorities.”
Private individuals had already scaled back their spending on electronics in the spring in view of the rising cost of living. On the other hand, the fact that not only consumers but also companies are saving is new – and critical for Dell.
This is shown by the latest figures from the group. The third largest computer manufacturer in the world after Lenovo and HP recently benefited from the fact that companies stocked up on PCs and notebooks. In the second fiscal quarter, which ended July 29, corporate banking grew 15 percent to $12.1 billion. Sales to private individuals, however, fell by nine percent to 3.3 billion.
Dell has grown significantly recently
Servers and storage solutions for companies have also been in high demand until recently, with the division increasing by twelve percent to $9.5 billion in the second quarter.
Overall, sales climbed nine percent to $26.4 billion – a new record for the second quarter. Profits fell compared to the previous year, however, by 20 percent to 506 million dollars.
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The time for new sales records should therefore be over for the time being. The market researchers at Canalys warn that companies’ IT budgets are now being reallocated at the expense of PCs and notebooks or even being cut down.
In addition, those responsible for IT extended the cycles in which the computers are renewed, for example. In addition, it can be expected that the companies will hire fewer people and thus their need for additional equipment will decrease. The higher interest rates would also make financing the hardware more expensive.
Sweet on a promotional tour
The crisis, some of which is still looming, is not the first at Dell for Sweet. The business graduate has been with the Austin-based company for a quarter of a century. The 62-year-old is one of the most loyal companions of company founder and CEO Michael Dell.
That’s why Sweet knows the group’s figures better than anyone else. However, the manager also listens carefully to the customers. The former PWC auditor is spending the current week in Europe to get a feel for the needs of local companies and consumers. Sweet also made a stop at a company customer conference in Munich.
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Sweet can also attract new customers with the success that many companies have already switched to computer subscriptions. In the second quarter, Dell posted so-called recurring revenues of $5.2 billion, eight percent more than a year earlier.
With services in the cloud, i.e. from data centers, the Texan company took in more than one billion dollars. According to Sweet, the number of customers in this area has risen by 78 percent.
Market researchers expect a longer dry spell
Small and medium-sized companies in this country sometimes still have difficulties with rental offers, emphasized Germany boss Tim van Wasen. It is often important for those responsible to own the IT equipment.
As bad as the decline is at the moment, Dell manager Sweet is confident that things will improve in the long term: “Technology is the key to our customers’ business models, they need us.” This is where the current downturn differs from the last major economic crisis of the years 2008/09.
Analysts agree. Despite the currently adverse environment, computers are important for the new type of flexible and mobile working and the digital transformation of companies, according to the experts at Canalys. Older devices would need to be replaced and therefore the market will recover by the second half of 2023.
One reason to get new computers is the high energy costs alone, says Germany boss van Wasen. Because modern devices consume much less electricity. Van Wasen: “This is an opportunity for us.”
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