December 7, 2004 11:28 AM PST

Michael Dell: IBM deal a dud

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IBM appears close to PC deal

December 7, 2004

A Legend in the making

August 12, 2002
SAN FRANCISCO--A deal that would let China's Lenovo acquire IBM's PC unit would work about as well as other mergers in the industry, Michael Dell said--that is, not well.

During a question-and-answer session Tuesday at Oracle's OpenWorld conference, the Dell chairman said a deal between Lenovo and IBM would likely follow a pattern seen in many mergers where two very different organizations fail to mesh.

"We're not big fans of the idea of taking companies and smashing them together," Dell said. "When was the last time you saw a successful acquisition or merger in the computer industry? It hasn't happened in a long, long time...I don't see this one as being all that different."

Dell also said his company is not interested in buying IBM's PC unit. Dell has only made a few acquisitions in its 20-year history. They have all been relatively small. The company's largest and first acquisition, ConvergeNet, helped get Dell into the storage market, but it didn't work out, and Dell dissolved the unit a few months later.

"We like to acquire our customers one customer at a time. We see organic growth as the more sustainable and healthy way," he said.

When asked how a deal would affect the Round Rock, Texas, computer maker, Dell was oblique but said the deal is part of a longer trend at IBM to move out of technology that's not part of back-end computer systems. By contrast, manufacturing is one of Dell's chief strengths.

"If you look over the last few years, there has been a continuing trend of not only declines in market share but de-emphasis and divestiture of various assets of the small computer system business at IBM. It's pretty clear this is not the long-term strategic priority for IBM," he said. "In our case, it's a different story. Last week, in stark contrast, we announced a brand-new computer manufacturing plant in North Carolina to support our growth in the U.S."

In recent years, Dell has also been gaining market share in China, a trend that has prompted Lenovo to cut prices.

10 comments

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Yeah Dell's chief strength is to make bricks.
I mean when its the week before all assignments are due in a
university. What does Dell computers do? Break down. One by
One they break down and causes large number of students
standing around, racing to the next available computer.
Posted by audiophilecc (65 comments )
Reply Link Flag
what's the real story ???
really ? - all the Dell PCs are failing one by one ? . Is this an application problem ? a networking problem ? a system admin problem etc etc.
Posted by (1 comment )
Link Flag
Here is the proof of my comment
<a class="jive-link-external" href="http://www.theeyeopener.com/storydetail.cfm?storyid=1552" target="_newWindow">http://www.theeyeopener.com/storydetail.cfm?storyid=1552</a>
They use Dells
Posted by audiophilecc (65 comments )
Reply Link Flag
Mr. Dell The prognosticator
The last time I remember Mr. Dell predicting the future it was
about Apple computer. Certainly no threat to his market share
but I have an emac next to his WinTel machine and I use (and
enjoy) the Mac 9/1 over his piece o s__t. I think he should give
me my money back.
Posted by patgrfxs (2 comments )
Reply Link Flag
Mr. Dell, sit down, shut up & buckle up...
Remember when Mr Dull blasted Apple &#38; Steve Jobs saying that they should close up shop &#38; give all the shareholders their money back...?
Check out the stock price of Apple TODAY v. Dell.
If that's so, then why is Dell trying so hard to "catch up" to Apple with their weak DullDJ "iPod Killer"...?
Dude, you're getting a Dud/Dull/Dell.
-Eyes wide open in Seattle-
Mac/Unix/Win User
Posted by Llib Setag (951 comments )
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Mike Dell- Mr. Insecurity
I've never met the man but clearly he hates any idea involving anyone else even remotely related to the computer industry - he is either so insecure or because he dropped out of college, his perspective is so narrow.

People think of him as some genius but all's done is figure out how to sell the cheapest computer and have the least amount of employees and tech support while doing so - and they've been succesful for what - 5 years? And everytime someone asks him anything about his competitors - his only answer - they're stupid.

Wel, so far Dell is pretty much 0 for 7 in attempts to sell anything other than cheap PC's. I'm sure he considers other stock 'stupid' so he will flame out so fast when Dell goes the way of Tandy, Packard Bell, Zenith and whoever else was the cheapest PC maker that year ...
Posted by jbelkin (167 comments )
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What would you expect him to say?
"That IBM move is great and they're going to overtake Dell."
He's in the business of selling his PCs. I've never heard one company come out and say their competitor is doing a better job. His job is to make Dell sound better than the competition. Similarly I'm sure the IBM boys are saying that Dell isn't so hot. It's normal. If Ellison, Gates, Jobs or Dell come out and say their product is the best do you believe them?
Posted by (79 comments )
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IBM Strikes again!
I still remember how much I liked Lotus Software - until IBM got into the picture and destroyed the most viable competition to MS Office. Dell makes darn good computers - say goodbye to another IBM product as they slowly fade away from the PC industry.
Posted by (1 comment )
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Dell is the WalMart of Computers....
Dell has a large share of the market because of their "Just in time" delivery and payment of system components. Their PCs are no better and in my opinion worse than some other manufacturers.
Dell is simply a supplier of commodity products. Dell does not innovate, they let others (namely Intel) do that for them. Dell's products are Intel's products. If you take a look at Intel's product roadmap then you are also looking at Dell's product roadmap.
Their support may be OK for consumers but for IT shops it is no better than anyone else's.

But as long as it makes the money then Michael Dell is happy. Personally I just think Walmart when I think Dell now, you want cheap go to Dell. They are riding on a long past history of supplying good products and services...that era is gone.
Posted by fred dunn (793 comments )
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