Dell Discounts to Defeat Downturn

28 November 2008

ROUND ROCK, Texas: Dell, the world's second largest personal computer manufacturer, is to offer US businesses a 0% finance initiative, and cut the prices on a range of its laptops and servers, as it seeks to counter slowing levels of spending.

The company's 0% finance scheme will be driven through its financial services arm, which had been up for sale until earlier this month when Dell said it would retain the business. 

It will also reduce the prices of some of its laptops and servers by between 11% and 20%, and slash the cost of server memory by around 40%.

Dell's total revenues fell by 3% in the third quarter from growth of 11% in Q2, but profits climbed by 1.4% to 5.3%; Hewlett-Packard, its main rival, posted a 10% increase in sales in Q3. 

One of the key drivers of Dell's recent profit growth has been the cheap price of components, and analysts suggest the new scheme could mark a trade-off between profit margins and market share.

Data sourced from Financial Times; additional content by WARC staff