Services, printing to help Dell hit $80 billion

AUSTIN, TEXAS - Dell plans to build on its relatively new businesses in IT services and printing in order to increase its yearly revenue to $80 billion over the next few years, Dell executives and customers said Wednesday.

Dell plans to formally unveil its $80 billion strategy Thursday at its analyst meeting in Austin, Texas. The company hopes to generate that amount of yearly revenue within the next three to four years, Dell Chief Executive Officer Kevin Rollins said in a press release Wednesday.

In 2002, Dell set a $60 billion yearly revenue target, and the company announced earlier this year that it expects to reach that figure during the current fiscal year, which will end in January 2006. The company has rarely missed an earnings target since the 2002 announcement, and the first quarter of this fiscal year will be no different, Dell said in the release. The company expects to meet the guidance it issued in February for first-quarter revenue of $13.4 billion and earnings per share of $0.37 when it reports its earnings on May 12.

In order to reach the next target, lesser-known Dell businesses such as printing and services will have to continue to grow, executives said Wednesday during briefings for press and analysts ahead of Thursday's meeting.

Dell is especially focused on sales of printer ink and toner, also known as "consumables," said Ro Parra, senior vice president for Dell Americas. Dell has an opportunity to capture more of the printer market because of how it delivers replacement ink or toner cartridges to customers, he said.

Home printer users have been trained to look for new ink cartridges in retail stores, which can be a frustrating game of "ink cartridge bingo," Parra said. Dell allows customers to track the ink levels remaining in their cartridges and order new cartridges online by clicking on a link within a print management software application.

Dell thinks customers will appreciate an easier method of buying replacement ink or toner than trolling the aisles of retail stores, Parra said. Dell printer executives did not directly address the issue of third-party replacement cartridges, which usually cost less than cartridges sold by printer vendors, but analysts believe the company also hopes its ink-replacement system will dissuade customers from buying their ink elsewhere.

Another growing business that the company highlighted on Wednesday was IT services. Dell's involvement in the services business thus far has been relatively muted compared with competitors such as IBM  and Hewlett-Packard, which have made services a key part of their businesses.

Dell doesn't plan to compete head-on with those companies, but instead to look to its current hardware customers and identify services associated directly with the deployment or support of Dell hardware, said Joe Marengi, senior vice president of Dell Americas.

Tom Gallagher, senior vice president of business development for Seton Health Care, was one of those customers that brought Dell services personnel into its IT department to completely manage that department. As a nonprofit health-care provider in Central Texas, Seton did not have the resources to attract the top IT talent in the area but needed to revamp its IT department in order to take advantage of new mobile technologies, he said.