Mostly: Classical

[Sexton O Blake]

Why is Dell in the low margin printer business?

I often wondered about that. Up to now they have been selling HP and Lexmark printers. Now they have their own brand - and I actually thought that was more of a branding issue (ie they get a manufacturer to make it and sell it with the DELL name). Well actually two years ago they did have a deal with Lexmark to do that.

But now they do their own - a low margin business - so why?

In the Dec 13 Business Week, Dell CEO Rollins said Dell was drawn into printers by the profit pool of competitors.

Wasn't too sure what that meant, but basically HP is using the cash from its printing business to fund the computer division that competes with Dell.

-- ie HP is subsidizing their crummy PC and server business (I wondered how I could post two messages in one day and reuse the word CRUMMY) with the sales of printers.

-- So if Dell wants to wipe out HP's computer business - they should not be selling HP printers.

HP has been criticized for not spinning off their printer/imaging division. If they did that, Dell would have less reason to sell their own printers.

This week IBM said they are getting out of the PC business too - noting the money ain't there anymore. So they are looking at sourcing it off to some Chinese company - which I suppose, may sell the PCs under the IBM logo.

Anyways thought it was an interesting revelation.


Happy Holidays all and Cheers!

Blake