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2
Demand forPersonal Computers in the
U.S.
Executive Team 7Colin Byxbee, Amber Templeton, Rachit Jauhari, Ethan
Yamasaki, James Millhiser
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1. Introduction2. Industry Trends3. Data Collection4. Analysis5. Forecast6. Q & A
Presentation Agenda
Colin Byxbee
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1. Introduction2. Industry Trends3. Data Collection4. Analysis5. Forecast6. Q & A
Presentation Agenda
Amber Templeton
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1. Introduction2. Industry Trends3. Data Collection4. Analysis5. Forecast6. Q & A
Presentation Agenda
Rachit Jauhari
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1. Introduction2. Industry Trends3. Data Collection4. Analysis5. Forecast6. Q & A
Presentation Agenda
Ethan Yamasaki
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1. Introduction2. Industry Trends3. Data Collection4. Analysis5. Forecast6. Q & A
Presentation Agenda
James Millhiser
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1. Introduction2. Industry Trends3. Data Collection4. Analysis5. Forecast6. Q & A
Presentation Agenda
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1. Introduction2. Industry Trends3. Data Collection4. Analysis5. Forecast6. Q & A
Presentation Agenda
Amber Templeton
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Industry Trends
Image Source: http://www.techhive.com/article/2042351/us-states-attorneys-general-to-take-aim-at-internet-safe-harbor-law.html
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Demand in Market
Image 1 Source: http://www.amazon.com/Dell-Inspiron-i15RV-6143BLK-Touchscreen-Textured/dp/B00D9KP70G Image 2 Source: http://www.thewritingnut.com/writing-tools/setting-shop-part-4-writers-computer/ Image 3 Source: http://i-deals.in/2014/03/27/flipkart-rs-3000-smartphone-attractive-discounts-dell-venue-tablets/
1990s: Internet and media applications
Early 2000s: Laptop computers
Late 2000s: Smartphones and Tablets
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Dell in the Market
2009: Dell in smartphone market
2010: Dell in tablet market
Image 1 Source: http://blogdetecnologiamoderna.com/moviles/dell-lanza-en-mexico-smartphone-mini-3ix/ Image 2 Source: http://microsoft-news.com/dell-venue-8-pro-tablet-starting-299-now-available-for-order/
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Outside Noise“Dell revenues slump as tablets and smartphones eat into market.”
“PC maker's quarterly reports show
profits falling 48% year on year…”
Quote Source: http://www.theguardian.com/technology/2012/nov/16/dell-revenues-slump-pc-tablet-smartphone
“Dell is looking like the sick man of the PC business…”
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Dell in the Market: Outcomes
2012: Dell exits smartphone market
Image 1 Source: http://blogdetecnologiamoderna.com/moviles/dell-lanza-en-mexico-smartphone-mini-3ix/ Image 2 Source: http://www.dell.com/learn/us/en/19/campaigns/laptops-tablets-coming-soon
Coming Soon: The Dell Venue 8 7000 Series Android™ Tablet
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U.S. Computer Usage
1995 2000 2005 2010 20150
50
100
150
200
250
300
350
400
Com
pute
r Usa
ge (i
n m
illio
ns)
Source: Computer Industry Almanac Inc.
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Dell PC Sales 1997- 2014
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20140
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000Dell Total
PC S
ales
(in
thou
sand
s)
Source: U.S. Bureau of Labor Statistics
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Made-to-Order PCs
Image Source: http://whitestoneresults.com/pay-per-click-setup-and-management/
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Dell vs. HP PC Sales 1997- 2014
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20140
1000
2000
3000
4000
5000
6000
Dell HP
PC S
ales
(in
thou
sand
s)
Source: U.S. Bureau of Labor Statistics
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Our Strategy
Image Source: http://www.underconsideration.com/brandnew/archives/a_dell-icate_redesign.php#.VIc7X7l0yM8
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1. Introduction2. Industry Trends3. Data Collection4. Analysis5. Forecast6. Q & A
Presentation Agenda
Rachit Jauhari
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Market Research
Scan the Market Survey Broad Research
68 Quantifiable Variables
17 Variables used in Regression
Final Equation
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Market Research
Scan the Market Survey Broad Research
68 Quantifiable Variables
17 Variables used in Regression
Final Equation
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Market Research
Scan the Market Survey Broad Research
68 Quantifiable Variables
17 Variables used in Regression
Final Equation
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Market Research
Scan the Market Survey Broad Research
68 Quantifiable Variables
17 Variables used in Regression
Final Equation
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Market Research
Scan the Market Survey Broad Research
68 Quantifiable Variables
17 Variables used in Regression
Final Equation
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Market Research
Potential VariablesMacro Economic Factors • Unemployment Rate
• US Population• % Change in GDP
Micro Economic Factor • Real PC Price
Company Factor • Advertisement Cost• Customer Satisfaction Index (CSI)
Trending Factor • Smartphones Sales
Seasonality Factor • Quarterly Sales
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Market Research
Scan the Market Survey Broad Research
68 Quantifiable Variables
17 Variables used in Regression
Final Equation
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1. Introduction2. Industry Trends3. Data Collection4. Analysis5. Forecast6. Q & A
Presentation Agenda
Ethan Yamasaki
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Analysis
Dell Demand = 13.03 A – 189.9 SS + 331 GDP – 1.813 RP + 2472
Key:D = Dell PC Demand (000’s)A = Dell Advertisement ($MM)
SS = Smartphone Sales ($Bn) RP = Real PC Price ($) GDP = Change in GDP (%)
Dell PC Demand Equation
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Analysis
Dell Demand = 13.03 A – 189.9 SS + 331 GDP – 1.813 RP + 2472
Key:A = Dell Advertisement ($MM)
Example: If we increase advertising by $1 million, Dell Sales will increase by 13,030 units sold
Dell PC Demand Equation
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Analysis
Dell Demand = 13.03 A – 189.9 SS + 331 GDP – 1.813 RP + 2472
Key:SS = Smartphone Sales ($B)
Example: If Smartphone sales are increase by $1 billion, Dell demand falls 189,900 units.
Dell PC Demand Equation
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Analysis
Dell Demand = 13.03 A – 189.9 SS + 331 GDP – 1.813 RP + 2472
Key:GDP = Change in GDP (%)
Example: For every 1% annual GDP increase, Dell PC units sold will increase by 331,000.
Dell PC Demand Equation
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Analysis
Dell Demand = 13.03 A – 189.9 SS + 331 GDP – 1.813 RP + 2472
Key:RP = Real PC Price ($)
Example: For every $1 of the PC Market increase, PC units sold will be reduced by 1,813 .
Dell PC Demand Equation
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Analysis
Factor Coefficient 2014 Q3 2014 Q4 2015 Q1 2015 Q2 2015 Q3 2015 Q4
Change in US GDP(%) 331.0 1.2 1.3 1.2 1.2 1.2 1.2
Real PC Price($) -1.8 60.4 59.1 58.2 57.3 56.3 55.4
US Smartphone Sales ($B) -189.9 10.3 10.4 10.5 10.7 10.8 10.9
Dell Advertisement ($M) 13.0 230.0 245.0 225.0 284.0 255.0 272.0
Constant 2472 1 1 1 1 1 1
Dell PC (000's Units)
3,796
3,994
3,690
4,432
4,029
4,225
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1. Introduction2. Industry Trends3. Data Collection4. Analysis5. Forecast6. Q & A
Presentation Agenda
James Millhiser
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Forecast - PC Sales
Factor 2014 Q3 2014 Q4 2015 Q1 2015 Q2 2015 Q3 2015 Q4
Dell PC (000's units) 3,796 3,994 3,690 4,432 4,029 4,225
Previous Quarter Sales (000’s units) 3,378 3,602 3,358 4,134 3,796 3,994
Increase in sales 12.4% 10.9% 9.9% 7.2% 6.1% 5.8%
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Forecast - Marketing
Factor 2014 Q3 2014 Q4 2015 Q1 2015 Q2 2015 Q3 2015 Q4
Dell Advertisement ($M) 230 245 225 284 255 272
Increase in Marketing, % Change from Previous Years quarter 11% 19% 10% 39% 11% 11%
% Benefit from in New Marketing Plan 10% 8% 5% 19% 1% 0.0%
Actual % Increase Needed 1% 11% 5% 20% 10% 11%
Actual Marketing Budget ($M) 209 229 215 245 223 224
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Forecast - Marketing
Factor 2014 Q3 2014 Q4 2015 Q1 2015 Q2 2015 Q3 2015 Q4
Dell Advertisement ($M) 230 245 225 284 255 272
Increase in Marketing, % Change from Previous Years quarter 11% 19% 10% 39% 11% 11%
% Benefit from in New Marketing Plan 10% 8% 5% 19% 1% 0.0%
Actual % Increase Needed 1% 11% 5% 20% 10% 11%
Actual Marketing Budget ($M) 209 229 215 245 223 224
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Forecast - Marketing
Factor 2014 Q3 2014 Q4 2015 Q1 2015 Q2 2015 Q3 2015 Q4
Dell Advertisement ($M) 230 245 225 284 255 272
Increase in Marketing, % Change from Previous Years quarter 11% 19% 10% 39% 11% 11%
% Benefit from in New Marketing Plan 10% 8% 5% 19% 1% 0.0%
Actual % Increase Needed 1% 11% 5% 20% 10% 11%
Actual Marketing Budget ($M) 209 229 215 245 223 224
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Forecast - Marketing
Factor 2014 Q3 2014 Q4 2015 Q1 2015 Q2 2015 Q3 2015 Q4
Dell Advertisement ($M) 230 245 225 284 255 272
Increase in Marketing, % Change from Previous Years quarter 11% 19% 10% 39% 11% 11%
% Benefit from in New Marketing Plan 10% 8% 5% 19% 1% 0.0%
Actual % Increase Needed 1% 11% 5% 20% 10% 11%
Actual Marketing Budget ($M) 209 229 215 245 223 224
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Forecast - Marketing
Factor 2014 Q3 2014 Q4 2015 Q1 2015 Q2 2015 Q3 2015 Q4
Dell Advertisement ($M) 230 245 225 284 255 272
Increase in Marketing, % Change from Previous Years quarter 11% 19% 10% 39% 11% 11%
% Benefit from in New Marketing Plan 10% 8% 5% 19% 1% 0.0%
Actual % Increase Needed 1% 11% 5% 20% 10% 11%
Actual Marketing Budget ($M) 209 229 215 245 223 224
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Forecast - Marketing
Factor 2014 Q3 2014 Q4 2015 Q1 2015 Q2 2015 Q3 2015 Q4
Dell Advertisement ($M) 230 245 225 284 255 272
Increase in Marketing, % Change from Previous Years quarter 11% 19% 10% 39% 11% 11%
% Benefit from in New Marketing Plan 10% 8% 5% 19% 1% 0.0%
Actual % Increase Needed 1% 11% 5% 20% 10% 11%
Actual Marketing Budget ($M) 209 229 215 245 223 224
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• Smartphone• Windows 10• Dell has come back home• New Dell, new business
Marketing Strategy
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• Smartphone• Windows 10• Dell has come back home• New Dell, new business
Marketing Strategy
Source: PC World
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Source List
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Quantifiable VariablesNet sales
Purchased in-process research & development expenses
Special charges - executive bonus
Research & development expenses
Selling, general & administrative expenses
Restructuring costs
Cost of sales
Gross margin
Special charges - restructuring costs
Total operating expenses
Operating income (loss)
Gain on non-current investments
Gain from sales of investments
Unrealized gain (loss) on convertible securities
Interest & dividend income
Interest income Interest expense Gain on sales of short term investments, net
Other expense, net
Other income (expense), net
Interest & other income (expense), net
Interest & other income (expense), net
Other income/(expense), net
Other income (expense), net
Income (loss) before provision for income taxes
Provision for (benefit from) income taxes
Income (loss) before accounting change
Cumulative effect of accounting change, net
Net income (loss)
Weighted average shares outstanding – basic
Weighted average shares outstanding – diluted
Year-end shares outstanding
Earnings (loss) per share - continuing operations – basic
Earnings (loss) per share - accounting change – basic
Net earnings (loss) per share - basic
Earnings (loss) per share - continuing operations – diluted
Earnings (loss) per share - accounting change - diluted
Net earnings (loss) per share - diluted
Cash dividends declared per common share
Apple CSI
Personal Computers CSI
Acer CSI Dell CSI Toshiba CSI HP CSI
IBM CSI Compac CSI PC $ Price CPI All PC $ Price Revised
Dell Sales Dell Share HP/Compac Sales HP Share % US Desktop Sales
Dell Revenue Total U.S. Sale % US Notebook Sales
Total % Sales Interest in
US Smartphones Sales
US Population Unemployment Rate
Unemployment Number
Real GDP Dell Advertising
Apple Advertising HP Advertising Toshiba Advertising
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Data Collection Sources
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Variables Used
PC Price CPI All
Real PC Price Dell Numbers
Dell Share HP/ Compaq Sales
HP Share
Total US Computers
US Population Real GDP
% Change in GDP
Quarter wise Sales of Dell
Customer Satisfaction Index
Unemployed Population in US
Unemployed rate In US
Dell Advertising
Smartphones
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Market Research
Brand Name Recognition
Acquisitions
Direct Business Model of Dell
Advent of Smartphones
Relationship with Suppliers
Leadership on Web Enterprise Customers Global Market Penetration
Great Recession Economic Downturn in 2001
Interest Expense Acquisition of HP and COMPAC
Income Tax Importance of I/T to the Industry
Globalization of the Industry
PC shipments
Operating Income Inventory Gross Margin Windows 8 effect
Advertising Strategy Information Systems at Dell
Electronic Data Interchange(EDI)
Business Vision
Total Households
Total Households with a computer (%)
Total Households with desktop or laptop computer (%)
Total households with handheld computer (%)
U.S. Computer and software store sales in the U.S
Households With a Computer and Internet Use at home
Households With a Computer and Internet Use
Dell's net revenue
Apple Inc Form10q,10k
Hewlett-Packard Co Form 10q,10k
PC CSI HP CSI
IBM CSI Compac CSI Acer CSI Toshiba CSI
Technology Trends Apple CSI % US Desktop Sales
% US Notebook Sale
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Analysis
Ethan
Model Summary S R-sq R-sq(adj) R-sq(pred) 531.448 85.23% 84.32% 82.68% Coefficients Term Coef SE Coef T-Value P-Value VIF Constant 2472 438 5.65 0.000 US Smartphone Sales ($Bn) -189.9 26.8 -7.08 0.000 2.00 Dell Advertisement ($MM) 13.03 2.37 5.50 0.000 4.12 Change in US GDP(%) 331.0 97.7 3.39 0.001 1.26 Real PC Price($) -1.813 0.187 -9.70 0.000 2.43 Regression Equation Dell PC Demand(Thd) = 2472 - 189.9 US Smartphone Sales ($Bn) + 13.03 Dell Advertisement ($MM) + 331.0 Change in US GDP(%) - 1.813 Real PC Price($)
Regression Model Statistic
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Analysis
Ethan
1997q1
1997q4
1998q3
1999q2
2000q1
2000q4
2001q3
2002q2
2003q1
2003q4
2004q3
2005q2
2006q1
2006q4
2007q3
2008q2
2009q1
2009q4
2010q3
2011q2
2012q1
2012q4
2013q3
2014q2 -
1,000
2,000
3,000
4,000
5,000
6,000 Model vs Actual
RegressionActual Data
Dell
PC D
eman
d (0
00's)
Analysis
Factor Coeffi cient (a) 2014_Q2 (b) Effect on PC demand(a)*(b)Dell Advertisement ($MM) 13.03 203.9 2,656.5 US Smartphone Sales ($Bn) -189.9 10.2 (1,934.6) Change in US GDP(%) 331 1.7 551.9 Real PC Price($) -1.813 61.3 (111.2) Constant 2472 1.0 2,472.0
D = + 13.03 A – 189.9 SS + 331 GDP – 1.813 RP+ 2472
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