Dell reported a 17% increase in its sales in its Indian operations in its fiscal third quarter. But this good performance in India, as also in China, was an exception for the world's third-largest maker of PCs. The company's net income fell 54% to $337 million, and its revenue fell 15% to $12.9 billion in the quarter.

Dell's over-dependence on the commercial segment has meant that it has lost market share worldwide to companies like HP and Acer. The consumer market revived faster which has helped these latter companies. Rise in the costs of components, such as memory and liquid-crystal displays, affected profit margins.

In India, Dell says it is now the No. 2 player, up from the No. 4 position at the beginning of last year. This could not be independently confirmed because in the first two quarters of this year, the company had slipped to the No. 3 position, behind HP and HCL.The company has been putting a lot of effort into its consumer offerings these past months.

Dell is now counting on a "major upgrade cycle" next year to spur worldwide demand. Steve Felice, the company's president for small and medium business who addressed reporters across Asia through a conference call on Friday, said that systems had become old and therefore large-scale replacements were inevitable soon. The launch of Windows 7 would also help, particularly in the consumer and small/home office segments, he said.

Felice indicated that some of the market share gains that companies like Lenovo and Acer had made was at the cost of margins. "At Dell, we are focusing on healthy profits and cash flows," he said.

"Perot is very good at application development, systems integration and BPO. They have 7,000 people in India. So India will become a big base for our international growth," Fellice said.