Dell 2009 Annual Report Download - page 36

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Table of Contents
Storage — All Commercial segments contributed to the year-over-year decrease in storage revenue during Fiscal 2010. Dell
EqualLogicTM performed strongly with year-over-year revenue growth of 45%. We are shifting towards more Dell-branded and co-
branded storage offerings, which generally can be sold with service solutions and provide increased margin opportunity. During
Fiscal 2010, we introduced easy-to-manage storage products such as the EqualLogicTM PS6 series with fast 10Gb Ethernet. We also
introduced our PowerVaultTM NX300 storage server, which is designed to simplify file sharing and collaboration for growing small
businesses.
• Services — Services offerings include infrastructure technology, consulting and applications, and business process services. Services
revenue increased year-over-year during Fiscal 2010 with revenue from Perot Systems contributing $588 million of the increase.
Without the contribution by Perot Systems, services revenue would have decreased 6%. A significant portion of Dell's services is
made up of support services, which tend to correlate with hardware unit growth. Therefore, excluding the impact of Perot Systems,
our declines in unit shipments contributed to the year-over-year services revenue decline. Perot Systems primarily impacted our
Public and Large Enterprise segments, with $418 million and $160 million in services revenue, respectively. Our deferred service
revenue balance increased 6.5% year-over-year to $6.1 billion at January 29, 2010. We continue to view services as a strategic
growth opportunity and will continue to invest in our offerings and resources focused on increasing our solutions sales.
The dynamics of our services business will change as we continue to integrate Perot Systems. With Perot Systems, we will extend
our services business further into infrastructure business process outsourcing, consulting, and application development. We also
anticipate expanding our existing managed and modular services businesses.
• Software and Peripherals — Revenue from sales of software and peripherals ("S&P") consists of Dell-branded printers, monitors
(not sold with systems), projectors, keyboards, mice, docking stations, and a multitude of competitively priced third-party peripherals
including LCD televisions, cameras, stand-alone software sales and related support services, and other products. The decline in S&P
revenue was driven by overall customer unit shipment declines and demand softness in displays, imaging products, and electronics,
which experienced year-over-year revenue decreases of 27%, 20%, and 9%, respectively. We continued to see growth in software
licensing, with revenue improvement of 5% during Fiscal 2010. We continue to believe that software licensing is a revenue growth
opportunity as customers continue to seek out consolidated software sources. All segments experienced year-over-year revenue
declines during Fiscal 2010, except for Public, which experienced year-over-year S&P revenue growth of 5%.
Software revenue from our S&P line of business, which includes software license fees and related post-contract customer support, is
included in services revenue, including software related on the Consolidated Statements of Income. Software and related support
services revenue represents 39% of services revenue, including software related during Fiscal 2010.
• Client
Mobility — Revenue from mobility products (which include notebook computers, mobile workstations, and smartphones) declined
during Fiscal 2010 even though unit shipments increased 7% over Fiscal 2009 due to an industry mix shift to lower priced mobility
product offerings. The unit increase was primarily driven by a 32% year-over-year increase in Consumer, while Commercial units
declined 12% for the same period. Overall, Consumer mobility revenue increased 4% year-over-year, while Commercial declined
20%. We believe the on-going demand trend towards mobility products will continue, and we plan to address this demand by
expanding our product platforms to cover broader feature sets and price bands.
Desktop PCs — During Fiscal 2010, revenue from desktop PCs (which include desktop computer systems and workstations)
decreased on unit declines of 17%. In the marketplace, we are continuing to see rising end-user demand for mobility products,
which contributes to further slowing demand for desktop PCs, as mobility growth is expected to continue to outpace desktop
growth. The decline in desktop PC revenue was also due to the on-going competitive pricing pressure for lower priced desktops and
the slowdown in global IT end-user demand during Fiscal 2010. Consequently, our average selling price for desktops decreased
11%
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