UPDATE 1-Dell says enterprise demand still very weak

* Sees FY10-12 hardware unit growth 10 pct or more

* Sees FY10-12 hardware rev growth 0-5 pct

* Says large enterprise and SMB business very weak

* Shares down 8 pct in morning Nasdaq trading (Adds comments on enterprise business and other forecasts)

By Gabriel Madway

AUSTIN, Texas, July 14 (Reuters) - Dell Inc (DELL.O) said demand from businesses large and small is still very weak and the company faces a big challenge long-term in its hardware business, where falling PC prices will pressure margins.

Shares of Dell, the No. 2 maker of personal computers, fell 8 percent in morning trade, a day after it forecast lower gross margins in the July quarter due to higher component costs, a competitive pricing environment and an unfavorable product mix.

Chief Financial Officer Brian Gladden told an analyst meeting on Tuesday that Dell expects hardware unit growth of 10 percent or more from fiscal 2010 through 2012, but sees hardware revenue growth of 0 to 5 percent.

"When you look at the projected market dynamics that we face through this business, we see relatively strong unit growth projections at 10 percent plus, but you see declining prices and margin pressure," he said.