Dell announced its going to expand its presence in China from 45 cities to more than 1,000 in 2008 in order to improve its marketshare.
"When we talk about that 45-city presence, we're really talking about cities with populations of 2 million plus where Dell has applied its direct [sales] approach," said Steve Felice, president of Dell Asia-Pacific and Japan, during a conference call with reporters.
Despite having a limited presence in China, Dell's performance in recent years underscored its success penetrating the Chinese market, Felice said. "We're only hitting a small portion of the total population in the total geography, and yet we're still seeing revenue growth rates and share performance that's extremely competitive," he said.
Fast-growing markets like China are more important than ever to Dell, which saw its consumer PC sales drop in the U.S. during the most recent quarter. By contrast, sales in Brazil, Russia, India, and China combined grew by 32 percent during the same period. The company is counting on continued fast growth in these markets to regain ground lost in recent quarters to rivals like Hewlett-Packard.
"It's definitely the right path to go down," said Bryan Ma, director of personal systems research at IDC Asia-Pacific. But he cautioned that HP and others are also counting on growth from these smaller cities, and Dell will face strong competition from them.
Over the next year or so, Dell will expand beyond the 45 Chinese cities where it now has a presence into smaller cities, using both its direct sales model and partnerships, Felice said. These smaller cities are now dominated by domestic PC vendors like Lenovo, but fast-growing demand for computers makes them an attractive target for Dell.
"It's our desire to have much broader coverage," he said.