Dell Not Threatened by Small Net Devices, CEO Says

FAIRFAX, VA. (03/13/2000) - Small computers capable of connecting to the Internet, like the hand-held Palm and cellular phones that can download Web pages, have become a significant force in the marketplace, but they don't stand a chance of replacing desktop and laptop PCs, according to Michael Dell, chairman and chief executive officer of Dell Computer Corp.

Dell, who spoke today at the 2000 Global Internet Summit here, said Palm Computing Inc.'s Palm computer other similar devices have "delivered excitement" to the PC marketplace, but he said the amount of revenue and profit generated by the devices are not significant.

"These devices are not necessarily substitutes to the PC, but complimentary.

You can't find a Palm Pilot user who doesn't have a PC," Dell said at a press conference after his speech to about 1,500 attendees of the conference hosted by Virginia Governor James Gilmore, a Republican, and U.S. Representative Tom Bliley, a Republican from Virginia.

Dell is the second-largest PC maker in the world after Compaq Computer Corp. and the largest in the U.S. [See "PC Growth Strong in '99, Dell Beats Compaq in U.S." Jan. 24.] Nevertheless, Dell today acknowledged that company's fourth fiscal quarter, which ended Jan. 28, was "challenging." [See "Dell Sneaks Ahead of Lowered Q4 Expectations," Feb. 10.]He was optimistic about Dell's future, especially in the areas of electronic commerce, technical support and Web hosting, and in opportunities presented by the continued refreshment of Internet architecture.

Dell again defended desktop PCs and laptops as he disagreed with predictions that cellular phones that allow users to view Web pages using the Wireless Application Protocol (WAP), a specification for sending Internet-based content to mobile phones, will eclipse traditional PC products. The devices' screens are simply too small, he said.

"People consume information better with their eyes," Dell said.

Dell also said growth in the number of small devices connected to the Web was good for his company because it drives demand for servers and storage computers, which lie at the heart of Dell's business. Most of Dell's research and development investment is going toward servers and other Internet architecture machines, he said.

Asked his views on taxation of Internet sales, Dell, whose company last year did half its sales on the Internet, said lawmakers should consider it a global issue. An increasing amount of consumer computer products that Americans buy are not actually built in the U.S., and it's fairly easy for manufacturers to ship the goods directly to end users, he said.

"You don't have the question of my state or your state," he said. "It's my country or your country, and that's a much more challenging issue to deal with."

Dell added that transactions concluded over the Internet should not be taxed differently from transactions concluded in regular stores, and lawmakers considering how to recover lost sales taxes should consider the improvements in the economy that are happening and the number of jobs being created because of the Internet.

Dell also commented on the IT worker shortage, another issue that, like taxation, has drawn the attention of Congress. Lawmakers should raise the cap on the number of immigrant workers with high-tech skills allowed in the country, Dell said.

"There is a huge shortage of workers," Dell said. "Congress should remember that a company like Intel (Corp.) doesn't just decide where to put (new facilities) in the United States. It puts them where the people are."

Dell, in Round Rock, Texas, can be reached at +1-512-338-4400 or http://www.dell.com/.

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