PC makers look far and wide for growth
Last week, PC giant Dell said most of its opportunity for expansion is outside the country where it's based. "I wouldn't be surprised if the U.S. is our slowest-growing region for the next couple of quarters," CEO Michael Dell said during a call with Wall Street analysts.
That's likely to be true across the industry. Last year, about 70 million PCs were sold in the USA, making up about 26 percent of the worldwide market, says researcher IDC. But that's down from 35 percent five years ago, IDC says.
PC sales are growing in the USA, but not nearly as fast as in the rest of the world, says IDC tech analyst Richard Shim. That's forcing computer makers to change the way they do business, and place new emphasis on sales in other countries, he says.
Consider U.S. stalwart Hewlett-Packard. It now gets about 69 percent of its revenue from other countries.
Like many companies, HP is directing much of its efforts at potentially lucrative markets in Brazil, Russia, India and China. Those economies are growing so fast that they have their own nickname: the BRIC nations. HP now has manufacturing facilities in each BRIC country, helping sales there jump 35 percent in its most recent quarter. In China alone, HP has sales staffers in more than 600 cities.
"The average family in the U.S. has three PCs. In China, it's more like one PC for 10 families," says Todd Bradley, the head of HP's PC division. "That's opportunity."
Other companies are making similar changes. No. 4 PC maker Lenovo is spending $50 million on new manufacturing plants and other facilities in Poland, India and Mexico. The company, which got its start in China but is now based in the United States, gets 72 percent of its business outside the U.S.
Taiwan-based Acer last year acquired U.S.-based Gateway, a deal that made it the world's No. 3 PC maker and introduced the company to many U.S. consumers. But Acer was already the No. 4 PC maker before the deal, thanks to strong sales in Asia and Western Europe.
Computer makers who have trouble going global may stagnate, says tech analyst Martin Reynolds with researcher Gartner. One example may be Dell, which now gets about half of its revenue from outside the United States.
Dell wants to expand far beyond its core market of American businesses, and it is pushing hard into BRIC and other nations. But, "Dell has always done best in English-speaking countries," Reynolds says.
That's hurt growth. Dell shares are down 7 percent since the company issued a lower-than-expected earnings report last week.
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