Dell sets sights on PC services
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Michael Dell: Seeking new revenue sources.
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NEW YORK -- Michael Dell, founder and chief executive of Dell Computer Corp., has dominated the personal computer market and is moving into new areas -- including data storage systems, handheld gadgets and printers.
But he is also setting his sights on one lucrative part of the computer sector not usually embraced by manufacturers -- computer services.
The company, based in Round Rock, Texas, is creating a range of services that it hopes will help it reach its goal of nearly doubling overall sales, to $60 billion, in the next five years.
Dell currently helps companies design, install and manage information systems, a business that grew 45 percent in the first fiscal quarter. But these services bring in only a couple of billion dollars, compared with total revenue of about $35 billion in 2003.
Dell is seeking new revenue sources amid a downturn in demand for technology -- although Dell has withstood that decline by selling directly to customers, helping it keep inventories and costs down, procure market share and increase profits.
However, it is unclear if Dell would be able to undercut rivals on price in the services sector, where manufacturing does not come into play.
Dell currently helps companies design, install and manage information systems.
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Dell made a small acquisition last year and more recently has been adding employees, Michael Dell said in an interview at the company's headquarters recently.
"There's actually quite a few people that are available to hire. They have the skills and we kind of prefer that way of growing," Dell told Reuters.
"If we found a company that -- these tend to be really small organizations -- if we found one that was a great fit, we'd certainly entertain it but we're not out there kind of actively searching for acquisitions," he said.
Dell is the latest in a number of companies shifting away from chips, disk storage and software to technology applications.
"You now have to have a wide range of services and applications to be successful in the corporate technology market," says Harry Berry, managing partner at Brightstar, British Telecom's tech incubator.
Observers say pressure on prices and profits for technology companies is leading to great deals for corporate customers but a tricky time for investors and suppliers.
Reuters contributed to this report.
