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Dell benefits from ‘flight to quality’

Vendor shares Q1 numbers and shows it has navigated through supply chain problems better than some of its competitors

Dell has seen its channel benefit from a “flight to quality” during the coronavirus pandemic as customers reach out for IT support.

The vendor released its first-quarter numbers overnight, with the firm showing some signs of impact from Covid-19.

The Q1 numbers, for the three months ended 1 May, saw revenues come in flat at $21.9bn and net income down 45% to $182m.

Strong demand for laptops helped the firm’s client solutions group bring in a 2% year-on-year improvement in revenues to $11.1bn. Dell managed to navigate through supply chain issues caused buy the coronavirus and take second place in worldwide commercial PC sales.

The infrastructure solutions group saw an 8% decrease in revenues as customers looked to spend money on remote working kit, rather than storage and servers. During the quarter, the firm started shipping its PowerStore autonomous storage platform, aimed at the mid-range segment.

In a call to analysts, Jeff Clarke, vice-chairman and COO at Dell, said the pandemic had underlined just how important technology had been in the crisis and it would play a major role in the recovery.

He said Dell’s reaction as a company had included steps to protect its staff, but has also to roll out a number of initiatives to support partners and customers, including a payment flexibility programme, and making it clear that it would make $9bn in financing available this year.

Clarke said its channel had also benefited from association with a vendor that was able to cover a wide range of IT needs.

“We saw a flight to quality where customers leaned on technology partners who had the flexibility and agility to provide solutions at scale across all of their IT needs and deliver services quickly and globally,” he said.

“We saw customers really move to partners who could provide the end-to-end capabilities and services they need across all ranges of products. We saw that from smaller companies to the largest multinational companies around the globe.”

Clarke said that as the quarter progressed and various governments tightened lockdown measures, Dell had seen some softening in demand from the SME customer base, but had looked to keep the business flowing by being more flexible.

“This pandemic has changed everything with unprecedented speed and scope – billions of people’ lives upended in a matter of weeks,” he said. “But there is also tremendous innovation and collaboration, heroism and humanity. There is a lot to be hopeful for, and there is a lot of opportunity ahead.”

Patrick Moorhead, president and principal analyst at Moor Insights & Strategy, said Dell had managed to navigate through the Covid-19 supply chain issues better than some of its competitors.

“Dell had a very good Q1 even without factoring in Covid-19, and it had financial ‘beats’ all over the place,” he said. “I believe this is proof of a well-managed supply chain and the company having products that people need and want during the pandemic.

“Dell had the highest per cent revenue growth in PCs and its infrastructure decline was lower than HPE, Cisco and Lenovo.”

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