On the Call: Michael Dell discusses computer maker’s pricing strategy

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On the Call: Dell’s CEO Michael Dell

SAN FRANCISCO — A key element of Dell Inc.’s turnaround strategy has been a vow not to cut prices as aggressively as rivals just to keep market share. The tactic has allowed competitors such as Acer Inc. and Hewlett-Packard Co. to steal business from Dell, and this fall Dell lost its ranking as the world’s No. 2 PC maker.

Dell reported Thursday that its net income dropped 54 percent in the latest quarter while revenue dropped 15 percent. The company’s CEO, Michael Dell, discussed the company’s pricing strategy on a conference call with analysts.

QUESTION: Once the upgrade cycle begins sometime next year, will you still focus on profit margin preservation over market-share stability, or does the strategy change somewhat to a more growth-oriented focus?

ANSWER: “We think we are holding or gaining share in the right kind of price points. Our efforts on the cost side should expand our ability to profitably compete in a larger portion of the price points. What I would also tell you is that the pipeline of client opportunities, we are already seeing more client activity in the last 30 to 60 days than we have in a long time, and the pipeline for client activity going forward into next year is the strongest it has been in a long time as well. So if I look at our commercial businesses, the second quarter was kind of the bottom. The third quarter was certainly better. October was the best, and November looks even better than October. So the momentum of the turns is good.”