Component shortage warnings take gloss off Dell Q1 numbers

Dell has signalled that it is gearing up its ecosystem to go after the high growth market areas after delivering a solid set of first-quarter (Q1) numbers.

Revenues in Q1 were up by 12% hitting $24.5bn for the three months ended 30 April. The Client Solutions Group delivered record revenue for the first quarter of $13.3bn, which was a 20% year-on-year (YoY) increase. Infrastructure Solutions Group also saw increased demand with a 5% rise to $7.9bn.

Dell has been encouraging the channel to get behind its storage products and those efforts appear to be paying off, with the sales growth experienced in Q4 continuing into Q1 with PowerEdge orders up 7% and midrange storage orders up 23%.

Jeff Clarke, vice-chairman and COO at Dell Technologies, used an analyst call to talk about the firm positioning itself for the future and still had plenty of opportunities for its partners to go after.

“Our serviceable or addressable market is expanding. In 2019, the serviceable TAM [total addressable market] for the broader client ecosystem was approximately $600bn. And looking out to calendar year 2025, it jumps to a projected $750bn. This expansion in TAM is driven by increased systems per household, faster refresh rates with higher notebook mix, and investments in a hybrid and remote workforce,” said Clarke.

He added that, as a result, Dell would be continuing to invest in the PCs and the software needed to make people productive and effective.

Clarke said that the serviceable TAM for the infrastructure business was also growing, from approximately $150bn in 2019 to a projected $200bn by 2025.

At the firm’s recent World event, the focus was largely on Apex, the as-a-service approach that the vendor was taking, and made clear that Dell was arming partners with the flexible options that customers were looking for.

Clarke said that Apex formed one of the main planks of its future strategy: “Together with VMware and our partner ecosystem, we are the hybrid and multicloud platform for the digital future. And we will deliver it all through a consistent cloud model and as-a-service with Apex.

“As we think about future areas of growth, we will leverage our leading capabilities, our relationship with VMware and the broader partner ecosystem to capitalise on new large addressable markets and emerging technology spaces – multibillion-dollar markets today that are projected to grow exponentially by 2025.

“Here, we will pursue logical and closely adjacent opportunities where we have the unique opportunity to win, in areas such as hybrid cloud, edge, telco, as-a-service and data management to drive high-value growth,” he added.

Supply problems, particularly with semiconductors, were the one major problem that the vendor was dealing with, and that issue combined with some uncertainty around the speed of Covid-19 recovery across the globe meant that the firm reduced Q2 revenue guidance.

“For Q2, our normal sequential revenue increase is about 6%. We are seeing progress on the economic front, but given ongoing supply constraints particularly affecting Client Systems Group as well as VMware’s standalone guidance, we expect Q2 revenue to be slightly below our normal sequential pattern over the past few years,” said Tom Sweet, CFO at Dell.