Dell's co-President and Chief Operating Officer (COO) Kevin Rollins has said that the PC industry is set for a rebound and that the Windows XP release will be a contributing factor. Rollins, who addressed an investor gathering at the Bear Stearns Technology Conference in New York, predicted that a major PC replacement cycle, driven by the XP release and faster versions of Intel's Pentium 4 processor, will begin in fourth quarter 2001. Coming from the PC market leader, this revelation is a good one for a battle-worn industry.

Like many PC makers, Dell has needed to look to nontraditional markets for continued growth. This necessity has led the company to expand in Southeast Asia, South America, and Europe, where it has focused primarily on enterprise markets. In the United States, Dell has pledged to undercut any rival. (Only Gateway has risen to Dell's challenge and designed a program to beat the price of any advertised system from a major PC maker. But Gateway's approach might miss the mark. Dell co-President and COO James T. Vanderslice said recently, "It's not necessary to be price competitive. It's most necessary to be cost-competitive.")

Dell's strategy has paid off. The company shipped more than 31 million PCs in first quarter 2001 and now ships approximately 25 percent of all the PCs sold in the United States. And analysts have awarded Dell for the effort: In June, Morgan Stanley upgraded its rating on Dell stock to "outperform."