Dell's net income drops 63% in Q1

"We're confident we can improve margins over time" on laptops, Gladden said.

Dell also sees an opportunity to sell its products through more retail stores, officials said. Dell now sells its products through 30,000 retail stores worldwide.

Demand for enterprise products such as servers and storage was muted during the quarter as companies froze IT budgets, especially in the U.S. and Europe, Michael Dell said during the conference call. That could continue into the upcoming quarters, Dell said. IT budgets may open up once companies start turning profits.

"We're seeing a big deferral of purchases among corporations," Dell said. Enterprises are planning a 2010 client refresh around Microsoft's Windows 7 OS after having passed on Windows Vista, which failed to gain traction among corporate enterprises. Desktops and workstations are getting old and users are getting restless as their machines get into their fourth or fifth year, he said. "That can't go on forever," Dell said.

Server refreshes may happen as managed services and emerging technologies such as virtualization play a larger role in data centers, Dell said. The company's infrastructure consulting side is growing as it sells more complex server and data center products, Dell said.

Though Dell couldn't predict when enterprise IT spending might pick up, he said it would first happen in the U.S. and then slowly expand worldwide.

Sales outside the U.S. made up 48% of revenue, and revenue from the "BRIC" emerging countries -- Brazil, Russia, India and China -- made up 9% of the company's total. BRIC revenue declined 21% from a year earlier but increased 11% from the previous quarter. China showed signs of growth, with unit shipments up 13% sequentially.

Reprinted with permission from

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