Windows 8 touchscreen devices to cost more, Dell says

IDG News Service - Touchscreen laptops and tablets with the upcoming Windows 8 OS will be priced higher than their non-touchscreen counterparts, Dell's CEO said on Tuesday.

Dell will offer a full complement of Windows 8 products when Microsoft launches its new OS, CEO Michael Dell said during the company's quarterly earnings call. The touchscreen Windows 8 products will occupy higher price bands, which could mean higher profit margins for Dell, he said.

"Unlike other Windows transitions, this is a transition where you are going to need a new PC," Michael Dell said, adding that touch capabilities could drive more people to buy Windows 8 tablets and PCs.

Microsoft hasn't provided a release date for Windows 8 but analysts expect its release later this year. Lenovo has said it will sell a ThinkPad tablet with Windows 8 when the OS is launched.

Despite excitement around the touch interface, however, the upgrade cycle to Windows 8 won't match that of Windows 7, especially in the enterprise, Dell said.

"Corporations are still adopting Windows 7, so we don't think there will be a massive adoption of Windows 8 early on," he said. It also remains to be seen if buyers will prefer tablets over PCs, he said.

The computer maker has been trying to reduce its dependence on sales of consumer PCs, where profit margins are lower, and is trying to sell more higher-priced systems, such as its XPS PCs. Dell's mobility revenue in the quarter just ended declined by 10 percent, while desktop revenue declined by 1 percent.

Its PC business underperformed as demand slowed down and more consumers opted for tablets and smartphones, Brian Gladden, Dell's chief financial officer, said during the call. Dell has shelved its consumer tablets and smartphones over the past few quarters, keeping only its enterprise tablets.

Dell's PC revenue also dropped below expectations because it didn't participate in the market for low-margin, entry-level PCs, which were a big chunk of PC sales for the industry overall, especially in emerging markets such as China.

Falling prices for memory and LCDs, and the normalization of hard drive supplies, favored companies selling those low-end systems, which in turn put pricing pressure on Dell's business.

The hard drive issues caused by flooding in Thailand last year have been resolved and drive prices will fall as the year progresses, Gladden said.

"That's behind us," he said.

Agam Shah covers PCs, tablets, servers, chips and semiconductors for IDG News Service. Follow Agam on Twitter at @agamsh. Agam's e-mail address is agam_shah@idg.com