Windows 7 sparked surge in business demand for PCs

Dell's PC sales jumped on Oct. 22, the day Microsoft released its latest operating system

A senior Dell executive is bullish about a recovery in PC demand from businesses, saying the Oct. 22 release of Windows 7 sparked a surge in PC sales for the company.

This surge in PC sales led by the release of Windows was preceded by slowdown as customers put off plans to buy new computers. This helps explain why Dell's third-quarter revenue came in below analysts' expectations, said Steve Felice, president of Dell's business unit that's focused on small and medium-sized businesses (SMBs), during a conference call with reporters on Friday.

"At the beginning of October, we saw demand decline as customers put off their decision to buy, to wait for Windows 7 to fully launch. As soon as Oct. 22 hit, both our consumer business and our SMB business had a very healthy increase in demand," Felice said.

Prior to the launch of Windows 7, Dell's direct sales in the Americas were running at about 80 percent of the company's expectations. However, once Microsoft released the new operating system, sales surged and that figure rose to 110 percent, he said.

"We didn't just see that increase in the last 10 days of October, we've now seen three weeks of November where that demand has been pretty consistently up," Felice said.

"That's why even though analysts had expected even more revenue, we're still quite bullish on the recovery that's happening with the demand cycle in the commercial business and we believe you'll see that in Q4," he said.

Unlike larger rivals Hewlett-Packard and Acer, which have benefitted from a consumer-led recovery in PC demand, Dell remains heavily dependent on PC sales to large companies and SMBs, even as the company works to diversify the range of products and services that it offers.

"We're not surprised to see the recovery at Dell come a little later than others might have reported," Felice said, noting Dell's earlier comments that the second quarter represented the bottom of the downturn and the company would see the beginning of a recovery during the third quarter.

"That's exactly what we're seeing and I think you'll see continued strength in Q4," he said.

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