Dell remains optimistic
Michael S. Dell, CEO, Dell Computer
"It turns out their business plans weren't Y2K-compliant," he said in his keynote address at the trade show here, noting the growing number of Internet companies that have collapsed this year.
"Warren Buffet was right again. Cash flow, profitability and earnings matter. Launch parties and sock puppets don't."
Dell also has had its share of troubles this year. Talking to reporters after his speech, Dell acknowledged that the market's more pessimistic climate has affected his company.
"There's no question that the economy is slowing," he said. "That slowdown affected all businesses."
In his keynote, Dell repeated Microsoft chairman Bill Gates' observation during his Sunday keynote that customers aren't about to stop buying ordinary PCs. Personal digital assistants (PDAs) will supplement--not replace--PCs, he said.
In addition, people will need to carry computing horsepower with them, Dell said--a jab at rival Sun Microsystems' philosophy of moving computing tasks to central servers.
"I wonder what employees of Sun do when they're on an airplane," Dell quipped. "Maybe they put a server in the overhead compartment. Maybe they bring along a good book."
Dell, like Gates and Hewlett-Packard CEO Carly Fiorina in their keynote speeches, acknowledged the current electoral turmoil. "I was talking to a friend of mine down in Austin. He's a governor, and it looks like both of us could use about 25 points right now," Dell said, referring to Dell's stock price and Texas Gov. George W. Bush's attempt to win the election.
Dell, long a staunch ally of Microsoft, wasn't entirely complimentary to the Redmond, Wash., software giant. Dell lauded Linux as well as Windows 2000 and dismissed the Tablet PC that Microsoft showed off Sunday.
"We've seen Web pads at Comdex for many, many years," Dell said. "In some ways, the Web pad is a remake of the pen PC shown at Comdex 10 years ago. I'm not sure if there are more being shown or more being sold." Instead, Dell said, laptops will be the basis for most mobile computing.
Dell poked fun at Sun's servers and at Internet companies, but those two market segments are transforming Dell's business. With server sales, the company is hoping to translate the economic benefits of its PC business--a plan Dell has been pursuing for years with only success.
As far as e-commerce goes, Internet sales now account for half of the company's revenue, with sales of $50 million each day taking place over the Web, Dell said.
Dell also trumpeted the coming era of wireless connectivity, saying all Dell notebooks eventually will come with the ability to connect to wireless networks. Soon, he predicted, wireless networks will replace today's wired networks in businesses.
Dell said he wasn't eager to increase his company's services revenue the way competitor HP has tried. HP said Monday it wants to increase it services business, despite its failed bid to acquire the consulting arm of PricewaterhouseCoopers (PwC).
Compaq and HP provide cautionary tales, Dell said. "The Compaq acquisition of Digital would be regarded by most as a fairly big distraction for Compaq," Dell said.
"We had a 20,000-notebook order on the line with PwC, so we're kind of glad the talks collapsed," he added.