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Surface tablet less than 2 percent of market, says Dell

Dell executives expect sales of Microsoft's upcoming Surface tablet to be "relatively small."

Microsoft's Surface tablet shouldn't take more than two percent of the PC market in 2012, said Michael Dell today.
Microsoft's Surface tablet shouldn't take more than two percent of the PC market in 2012, said Michael Dell today.

Michael Dell said today he expects sales of Microsoft's Surface to be "relatively small."

The Dell founder and chief executive commented on Microsoft's upcoming tablet during the PC maker's second-quarter earnings conference call this afternoon.

"I think there's an understanding of the number of units that they're likely to sell is a relatively small percentage. Maybe in the 1 [percent] to 2 percent range of total PC units during next year," Michael Dell said in response to analyst's question.

CFO Brian Gladden also had something to say. "[About] Microsoft entering the space -- we've spent time speaking to Microsoft and understanding how they're thinking about it. There clearly are opportunities for us as Windows 8 comes through and how we differentiate our products."

Gladden continued. "At the same time they've announced the Surface product that will be in that space and we'll have products in there. I think you'll see a diverse set of offerings that take advantage of what Windows 8 brings to market," he said.

Gladden also talked about weakness in PCs. "The desktop and mobility business was down 14 percent...in a challenging environment," said Gladden. "The revenue deterioration was above anything we expected."

PCs are losing out to tablets and smartphones. "We also continue to see discretionary spending directed to alternative local devices like tablets and smartphones," he said.

Dell will respond with tablets and hybrid devices. "We're positioned to be a leader in addressing the emerging BYOD (Bring Your Own Device) trend with...our upcoming tablets and converged devices. You'll see new Windows 8 ultrabooks, all-in-ones, tablets, converged devices in the fourth quarter and headed into next year," Gladden said.

Dell today reported second quarter revenue of $14.48 billion, a 7.5 percent decline from the same period in the previous year. The company expects third-quarter revenue to decline two percent to 5 percent sequentially.

Dell posted a profit of $732 million, or 42 cents a share, off from the $890 million, or 48 cents a share, reported a year earlier.

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