Dell 2008 Annual Report Download - page 32

Table of Contents
ProSupport offerings, which distilled ten service offerings down to two customizable packages spanning our commercial product and solutions
portfolios with flexible options for service level and proactive management. We also expanded our services business with new offerings in enterprise
solutions and remote infrastructure management. For Fiscal 2009, Americas Commercial and APJ Commercial led year-over-year revenue growth
with increases of 14% and 6%, respectively. EMEA Commercial revenue declined 1% for Fiscal 2009. Our deferred service revenue balance
increased 7% year-over-year to $5.6 billion at January 30, 2009, primarily due to strong unit growth in the first half of Fiscal 2009. We continue to
view the services as a strategic growth opportunity and will continue to invest in our offerings and resources focused on increasing our solution
sales.
Storage — Revenue from sales of storage products increased 8% year-over-year for Fiscal 2009. Year-over-year storage growth was led by strength
in our PowerVault line and the strong performance of our EqualLogic iSCSI networked storage solutions, which we acquired in Fiscal 2008. EMEA
Commercial, APJ Commercial, and Americas Commercial all contributed to the increase in storage revenue with year-over-year growth of 20%,
12% and 2%, respectively, for Fiscal 2009. During the fiscal year, we expanded our storage portfolio by adding increasingly flexible storage choices
that allow customers to grow capacity, add performance and protect their data in a more economical manner.
Fiscal 2008 compared to Fiscal 2007
Mobility — In Fiscal 2008, revenue from mobility products grew 13% year-over-year on unit growth of 16%. The growth was led by the APJ
Commercial and EMEA Commercial segments with 35% and 23% increases in revenue year-over-year, respectively, while Americas Commercial
revenue increased 9%. Unit shipments grew year-over-year in these three segments by 32%, 30%, and 19%, respectively. Global Consumer mobility
units were flat during Fiscal 2008 as compared to Fiscal 2007. Even though we posted mobility unit growth of 16% during Fiscal 2008, according to
IDC, our growth was below the industry's growth of 34% during calendar 2007. To capitalize on the industry growth in mobility, we separated our
consumer and commercial design functions — focusing our consumer team on innovation and shorter design cycles. As a result, we launched four
consumer notebook families, including InspironTM color notebooks and XPSTM notebooks, for which the demand was better than expected. We also
introduced VostroTM notebooks, specifically designed to meet the needs of small business customers. During the fourth quarter of Fiscal 2008, we
launched our first tablet — the LatitudeTM XT, the industry's only sub-four pound convertible tablet with pen and touch capability.
Desktop PCs — During Fiscal 2008, revenue from desktop PCs decreased slightly from Fiscal 2007 revenue on a unit decline of 2% even though
worldwide industry unit sales grew 5% during calendar 2007. The decline was primarily due to us being out of product feature and price position
and consumers migrating to mobility products. Our Global Consumer segment continued to perform below expectation in Fiscal 2008 with a 13%
year-over-year decrease in desktop revenue. Global Consumer was the primary contributor to our worldwide full year decline in desktop revenue
with Americas Commercial also contributing to the weaker performance during Fiscal 2008 as compared to Fiscal 2007. The decline was partially
offset by a strong performance in APJ Commercial where desktop revenue and units both increased 13% during Fiscal 2008 over prior year. In
Fiscal 2008, we introduced VostroTM desktops specifically designed to meet the needs of small business customers.
Software and Peripherals — In Fiscal 2008, S&P revenue increased 10% year-over-year. EMEA Commercial lead S&P revenue growth with a
year-over-year increase of 18%, and Americas Commercial and APJ Commercial revenue growth was 13% and 12%, respectively, during Fiscal
2008 as compared to Fiscal 2007. The increase in S&P revenue was primarily attributable to strength in imaging and printing, digital displays, and
software licensing. We also acquired ASAP during the year as we believe having stronger software licensing offerings and related customer
management tools are areas of strategic opportunity.
Servers and Networking — In Fiscal 2008, servers and networking revenue grew 12% on unit growth of 6% year-over-year as compared to industry
unit growth of 8%. Our unit growth was slightly behind the growth in the overall industry, while we improved our product feature sets by
transitioning to new platforms, and as we managed through the realignment of certain portions of our sales force to address sales execution
deficiencies. A significant portion of the revenue growth was due to higher average selling prices, which increased 5% during Fiscal 2008 as
compared to the prior year. Fourth quarter year-over-year revenue growth of 2% was below industry growth and our expectations as conservatism in
the U.S. commercial sectors affected sales of our server products. All regions experienced strong year-over-year revenue growth with APJ
Commercial leading the way with 21% growth on unit growth of 6%; additionally, server and networking revenue increased 16% and 8% in EMEA
Commercial and Americas Commercial, respectively. For Fiscal 2008, we were again ranked number one in the United States with a 34% share in
server units shipped; worldwide we were second with a 25% share. Servers and networking remains a strategic focus area. Late in the fourth quarter,
we launched our 10G blade servers — the most energy efficient blade server solution on the market. Our PowerEdge servers were ranked number
one in server benchmark testing for overall performance, energy efficiency, and price.
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