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 user 2005-06-07 at 10:15:00 am Views: 57
  • #9793

    While it preys on HP printers.

     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
    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.