Does Dell's expansion into other IT prodcuts and services make good strategic sense? Why or why not
Represente dan effort to Diversity the company’s product base and to use its competitive capabilities in PCs and servers to purgue revenue growth opportunities.
Why to expand into products and services that complemented tis sale of PCs and servers?
We tend to look at waht is the next big opportunity all the time. We can’t take on too many of these at once, because it kind of overloads the system. But we relieve fundamentally that if you think about the whole market, it’s about an $ 800 bilion market, all areas of technology over time go through a process of standardization or commonditization. And we try to look at those, anticipate what’s happening, and develop strategies that will allow us to ge tinto those markets. In the Server market in 1995 we had a 2 percent market share, today we have over a 30% share, we’re Lumber 1 in the U.S how did that happen? Well, first of all it happened because we started to ahve a high market share for desktops and notebooks. Then customers Discover. Dell provides great support
By offering some services, but not the services of the tradicional proprietary computer company, we’ve been able to increase our share. And in fact, what tends to happen is customers embrace the standards, because they know that’s going tos ave them costs.
Example: about a year ago we entered into the data networking market. So we have Ethernet swithces, layer 2 switches; every PC attaches to a switch, every Server attaches to a switch. It’s a pretty easy sale, switches go along with computer Systems.
Corporate customers paid dell fees to provide technical support, on-site service, and help with migrationg to new IT Technologies.
Services were one of the fastest-growing parto f Dell, with revenues climbing from $1.7 billion in 2002 to about $5 billion in 2005. Dell’s service Business was slplit about 50-50 between what...