Dell’s decision to close its manufacturing plant in Texas, shedding 900 jobs later this year, is evidence of the growing nervousness in the PC market.

The combination of downward price pressure, increasing consumer preference for retail sales, and growing demand for mobile devices are all combining to make profits for desktop computers difficult for Dell to sustain.

The closure is part of a range of measures that the IT supplier hopes will deliver annual cost savings of $3bn (£1.5bn) per year over the next three years, Also included are plans to cut 8,200 members of staff, making up 10 per cent of its total workforce.

“We expect that these actions, along with the continuing rigour we are applying to operating expense control throughout our operations, will result in an improved, world-class cost structure,” said Don Carty, Dell’s vice chairman and chief financial officer, in a statement.

Dell’s income for the fourth quarter of 2007 was $679m (£342m), 6.5 per cent down on the same period in the previous year, despite revenue increasing from $14.5bn (£7.3bn) to $16bn (£8.1bn).

Dell’s laptop sales grew 37 per cent in 2007, compared with just 10 per cent for desktops, and the company was overtaken by HP as the world’s biggest supplier of desktop PCs in the same year.

Rival vendor Acer has made a significant impact on the notebook PC market with its range of aggressively priced laptops and portable computers at prices that other manufacturers have struggled to match.