Michael Dell has been very vocal about Dell’s plans to stay in the PC business even as competitors like HP think about exiting it, and in an interview with the Financial Times he explained why.It’s not just the fact that people are buying hundreds of millions of PCs per year.
It’s also because being in the PC business lets you negotiate good prices on components for servers, which are big business for both companies.
As he put it, “Think about the scale economies in our business. As a company spins off its PC business, it goes from one of the top buyers in the world of disk drives and processors and memory chips to not being one of the top five. And that raises the cost of making servers and storage products. Ultimately we believe that presents an enormous opportunity for us and you can be sure we are going to seize it.”
Dell’s enterprise business — which includes servers as well as software and services, was the company’s biggest segment in the last quarter, making up about 30% of its overall revenue. For HP, enterprise hardware is growing (up 7% last quarter) while traditional consumer businesses like PCs and printing are down.
Dell is the number-two PC maker after HP, according to Gartner.
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