DELL TARGETING HP’S IMAGING/PRINTING GRP

[Anonymous]

While it preys on HP printers, IBM PCs
 June, 2005
Dell’s acquisition of
worldwide computer market share appears to be slowing due to
contracting PC growth rates in the United States. The company currently
generates 66% of its revenue in the Americas region. Dell needs to look
overseas to catalyze share gains again, as these markets continue to
experience higher growth and IT demand. The company is being challenged
abroad by Acer in the EMEA notebook market, IBM and Lenovo in China,
and Hewlett-Packard across all overseas geographies. Dell’s growth in
many overseas regions is being tempered by its limited use of the
indirect sales channel. IBM, Lenovo, HP and Acer have all built strong
reseller relationships, and these sales channels continue to drive
revenue and deliver customers Dell is currently not able to reach. Dell
management is being patient and seems very confident that international
sales will continue to grow. Given the company’s strong PC value
proposition and cost-efficient business model, TBR believes Dell is
appropriately confident. We believe the company will see continued
success overseas, even if this growth is compared to the company’s
strong U.S market track record. Dells confidence may also lie in its
massive PC installed base and successful expansion into adjacent
businesses such as printers, displays and other peripheral products.
These operations are driving upwards of 75% of the companys revenue
today, and masking any slower growth overseas and in Dells enterprise
product businesses. As such, TBR expects the company to achieve $57
billion in revenue in 2005 and $64 billion in 2006. Dell is well on its
way to achieving its $80 billion revenue target in a five-year
timeframe.
Dell is specifically targeting HP’s warranty services operations and
Imaging & Printing Group (IPG) in order to diminish HP’s cash cow
operations. Dell is also targeting IBM’s PC business during its
transition to Lenovo ownership. TBR expects Dell will target the EMEA
market more aggressively in the coming two years by building a new
assembly facility in Germany. This facility, if it comes to fruition,
would serve much of Western Europe and help Dell compete more
effectively against both Acer and Fujitsu Siemens in the EMEA region.
Although competitors appear to be rallying to confront Dell going
forward, TBR believes the company is seeing slightly less competition,
specifically in the United States, and experiencing a margin boost due
to a favorable component cost environment.

[Author]

June 7, 2005 at 10:13 AM