Acer’s ambition to be the world’s largest PC maker by 2011 would have been laughable a year ago. But in Gartner’s latest quarterly numbers, released last week, Taiwan-based Acer saw its global market share grow by more than a third, to 13 percent of the total market. It’s now neck and neck with Dell for No. 2 (Dell has 13.1 percent).
HP retains the clear lead overall, with 19.8 percent share, but Acer is growing much faster.
Then there’s Dell. Its shipments fell 17 percent for the quarter compared to the year before. In fact, First Global analyst Amitabh Goel notes that the other top four PC makers (HP, Acer, Lenovo, and Toshiba) actually had a shipments increase of 10 percent. In other words, Dell is bearing essentially all the brunt of the economic downturn. Rarely has one company absorbed so much pain for its rivals.
It’s not likely to get better for Dell, either--not with companies such as Acer willing to trade profits for market share. It’s a macabre twist of fate for Dell, which during the 1990s used its operating efficiencies to force all of its rivals to run at a loss. Dell made much more money back then than Acer does now, but the effect for Acer’s hapless rivals is the same. They can either try to maintain market share and incur financial pain, or back off and watch Acer take still more share and impose its will on the market to an even greater extent.
Clearly, Dell needs to make some kind of dramatic escape from this trap. Just sticking to its knitting isn’t going to fix things. Neither, evidently, are moves that were once considered radical around the company’s Round Rock, Texas headquarters, such as the company’s decision to start selling at retail stores as well as on its website. That was two years ago.
What’s the answer likely to be? For starters, Dell seems intent on moving beyond Wintel in order to tap markets for new, cheaper kinds of devices. That’s why it has created a cellphone based on Google’s Android operating system, and why it evidently is also testing a notebook PC based on Android.
But Android itself won’t save Dell--certainly not if Dell doesn’t come up with truly killer implementations of Google’s easily customized code (As regards the cellphone, so far is not so good; Carriers apparently panned the product, one reason it hasn’t been publicly announced).
Rather, the company may have decided it has little choice than to do a big acquisition. It reportedly is looking to hire a top-flight M&A maven that would report to the CFO. Never mind that the 25 year-old company has essentially zero success when it comes to buying and successfully integrating companies. Dell needs to buy its way into some promising growth markets, and do it fast--before its many corporate computing rivals grab all the tasty targets. /p>
Clearly, all the big players are jockeying to be far broader, one-stop-shops as the market moves into the cloud-computing era. It will no longer be enough to focus on one of the traditional market segments--that is, computers, networking, storage, software or services. If that fact was lost anyone, Larry Ellison left little doubt by buying Sun.
The price of more inaction could be high. In fact, Bill Whyman, an insightful analyst with International Strategy & Investment, noted in a May 05 report called “ORCL-JAVA AND THE NEW TECH ORDER” that Dell “could end up being acquired”. That would have sounded laughable a year ago, as well.
This article was first published as a blog post on BusinessWeek.com
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Nightmare for Dell: Acer closes in on No. 2 in PCs
I'm really glad DELL shipment fell while others' held steady. It confirms my suspicions about DELL quality. Cheap junk is still junk. My DELLs barely survived a year so I've moved on to it's competitors.
The only escape or redemption for DELL is to offer free trade-in or repair for their past sins. It will be a massive one-off charge, but probably the only way to win back customers that used to support it in the 90s.
HYH
Posted by h huang on Tuesday, May 12 2009 01:12 PM