Feeds

Dell could go indirect with Acer buy - analyst

Model 2.0

Secure remote control for conventional and virtual desktops

Michael Dell could prove that "Dell 2.0" is more than a marketing throwaway by buying rival Acer, according to a leading Wall Street analyst.

Sanford Bernstein analyst Toni Sacconaghi today laid out a plan for Dell to revive its fortunes by purchasing Acer - a relatively cheap target with a $4bn market cap. Such a move would give Dell broader access to Asian and European customers, a stronger notebook line and a massive indirect sales channel. Of course, Dell would have to give up on everything it holds dear by swallowing its pride along with Acer.

Dell 1.0 rose to the top of the computer kingdom via the lean, mean "Direct Model." The company also relied on a tight research and development budget and a rejection of large, disruptive acquisitions.

This strategy worked well until 2005 and 2006 when Dell's business started to slow. The company is now trying to correct its customer service problems and improve PC and server sales under the so-called Dell 2.0 model championed by reinstated CEO Michael Dell.

Buying Acer could be a quick fix for some of Dell's issues, according to Sacconaghi.

"A combined Dell-Acer would enjoy leading share in nearly every major region of the world, strong products in both the notebook and desktop segments, and far-reaching distribution through both direct and indirect channels," the analyst wrote in a research note.

The analyst - one of the best on Wall Street - stressed that he's heard no rumblings about a Dell/Acer deal. He simply likes the idea.

In order to make the acquisition effective, Dell would of course need to lay off workers who hold similar jobs at the two companies.

With that dirty work out of the way, Dell could expand its business in Europe and Asia - "where Dell's position is relatively weaker." Dell could also gain an indirect sales channel overnight and sell more high-margin laptops.

"While we have no evidence that a Dell-Acer combination is being considered by either party, we do believe such a mvoe could make strategic and financial sense," Sacconaghi wrote. "We believe Acer could help Dell address many of the challenges it currently faces, but would represent a significant departure from Dell's historical track record of acquisitions and from its 100 per cent direct selling model."

While the Acer deal could prove effective, it would sure mess up the Dell college dorm room lore, and the company's penchant for saying the Direct Model is the answer to every problem. ®

Choosing a cloud hosting partner with confidence

More from The Register

next story
Oi, Tim Cook. Apple Watch. I DARE you to tell me, IN PERSON, that it's secure
State attorney demands Apple CEO bows the knee to him
4K-ing excellent TV is on its way ... in its own sweet time, natch
For decades Hollywood actually binned its 4K files. Doh!
Phones 4u website DIES as wounded mobe retailer struggles to stay above water
Founder blames 'ruthless network partners' for implosion
Apple's SNEAKY plan: COPY ANDROID. Hello iPhone 6, Watch
Sizes, prices and all – but not for the wrist-o-puter
DARPA-backed jetpack prototype built to make soldiers run faster
4 Minute Mile project hatched to speed up tired troops
Hey, Mac fanbois. HGST wants you drooling over its HUGE desktop RACK
What vast digital media repository could possibly need 64 TERABYTES?
prev story

Whitepapers

Providing a secure and efficient Helpdesk
A single remote control platform for user support is be key to providing an efficient helpdesk. Retain full control over the way in which screen and keystroke data is transmitted.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
Storage capacity and performance optimization at Mizuno USA
Mizuno USA turn to Tegile storage technology to solve both their SAN and backup issues.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Security and trust: The backbone of doing business over the internet
Explores the current state of website security and the contributions Symantec is making to help organizations protect critical data and build trust with customers.