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Dell Dominate Printers
and PDAs? Puhlease!?
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 Dell’s
generating lots of noise about its planned foray into the branded
printer and PDA business, but they’re clearly drinking
their own Kool-Aid if they think they’re going to turn
the markets around overnight.
In the case of printers, where Dell already resells about 2
million units per year, the company faces huge stumbling blocks
in gaining market share from market leader HP, which has 47%
of the standard printer market according to IDC. That’s
more than twice the market share of Dell’s new buddy, Lexmark,
which found itself forced to seek other prospects after the
HP/Compaq merger last spring. While Dell’s cozying up gave
Lexmark’s stock a short-term burst, many industry watchers
believe that the company will ultimately discover that its agreement
with Dell is a Faustian bargain, and that over time its financials
will be bled white by the deal.
On the PDA front, Dell is even further in the hole, having to
start from scratch with zero base of sales and a reliance on
low-ball, margin-squeezed overseas contract OEMs for product.
As Dell tries to focus on capturing enterprise sales for its
new PDA, they face serious obstacles and backlash from the long-scorned
sales channel. As Frank Gillette, an analyst at Forrester Research,
explained, "Dell is an arms merchant. They don’t have
allegiances."
Despite all the hype over Dell’s dive into the pool of
printers and PDAs, Round Rock won’t see serious bottom
line benefits for some time. "Dell is not going to suddenly
have 10% to 15% of its revenue come from printers," said
Brent Bracelin of Pacific Crest Securities. Andy Neff at Bear
Stearns estimates that the Lexmark agreement won’t mean
much to Dell’s financials until late 2004 or even 2005.
Michael Dell himself admits that printer sales for Dell in the
first full year might total only $150-300 million, or about
.5 – 1% of total revenues.
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Technology Intelligence Pulse |
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