Dell 2009 Annual Report Download - page 28

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Table of Contents
• Services Revenue, including software related — Services revenue increased year-over-year by 5% during Fiscal 2010. The increase
in services revenue was largely due to our acquisition of Perot Systems, which contributed $588 million in services revenue during
the fourth quarter of Fiscal 2010. Excluding the contribution by Perot Systems, services revenue decreased 2%. Our service offerings
have traditionally been tied to the sale of hardware; therefore, the 6% decline in hardware demand negatively impacted our services
revenue.
Overall, our average selling price (total net revenue per unit sold) during Fiscal 2010 decreased 8% year-over-year mostly due to
competitive pricing pressures and a change in product mix towards lower-priced offerings, particularly in our Consumer segment.
Average selling prices in Consumer declined 21% during Fiscal 2010, mostly due to our expansion into retail and a continuing shift in
mix to lower-priced products. In the Consumer business, our market strategy is to expand our product offerings and customer coverage,
by focusing on optimized products and services that have the features that customers value. We continue to see competitive pressure,
particularly for lower priced desktops and notebooks. We expect this competitive pricing environment will continue for the foreseeable
future. The average selling prices for our Commercial segments remained relatively flat from Fiscal 2009.
Outside the U.S., we experienced a 16% year-over-year revenue decline for Fiscal 2010 as compared to an approximate decline of 11% in
revenue for the U.S. during the same period. Revenue outside the U.S. represented approximately 47% of net revenue for Fiscal 2010. At
a consolidated level, BRIC revenue increased 4% during Fiscal 2010 and has been increasing sequentially since the fourth quarter of
Fiscal 2009. We are continuing to expand into emerging markets by tailoring solutions to meet specific needs of these customers, and
enhancing relationships to provide customer choice and flexibility.
During Fiscal 2010 and Fiscal 2009, the principal currencies in which we transact business experienced more volatility primarily due to
macroeconomic conditions, including the global recession. However, we manage our business on a U.S. Dollar basis and utilize a
comprehensive hedging strategy intended to mitigate the impact of foreign currency volatility over time. As a result, the impact of
currency movements was not significant to our consolidated results of operations or any related trends.
Fiscal 2009 compared to Fiscal 2008
• Product Revenue — The decrease in product revenue during Fiscal 2009 was primarily attributable to a decrease in selling prices.
Average selling prices were impacted by a change in revenue mix between our Commercial and Consumer business as well as our
increased presence in consumer retail which contributed to overall lower average selling prices. From a product perspective, a 10%
year-over-year decrease in desktop revenue also contributed to our product revenue decline.
• Services Revenue, including software related — The year-over-year increase in our Fiscal 2009 services revenue was primarily
attributable to a 41% year-over-year increase in software related revenue primarily driven by our ASAP Software Express, Inc.,
("ASAP") acquisition in the fourth quarter of Fiscal 2008 and a 7% year-over-year increase in services revenue.
Revenue outside the U.S. represented approximately 48% of Fiscal 2009 net revenue. Outside the U.S., we produced 4% year-over-year
revenue growth for Fiscal 2009 as compared to a 3% decline in revenue for the U.S. The decline in our U.S. revenue was mainly
attributable to our Commercial business in the U.S., which was impacted by the downturn in the global economy during the second half
of Fiscal 2009. Our U.S. consumer business also was impacted by the economic slowdown; however, this business's revenue grew during
Fiscal 2009, aided by our expansion into retail through an increased number of worldwide retail locations. BRIC revenue grew 20%
during Fiscal 2009 as we tailored solutions to meet specific regional needs, and enhanced relationships to provide customer choice and
flexibility. From a worldwide product perspective, the continued decline in desktop unit sales and prices, and decreases in mobility
selling prices contributed to our Fiscal 2009 performance.
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