Dell keeps hammering away on
price
By Reuters
May 23, 2001, 12:55 p.m. PT
AUSTIN, Texas--Dell Computer President James Vanderslice declared a full-scale
price war on Wednesday in a bid to increase market share and said the company
might even make an acquisition with its huge cash reserves.
Vanderslice, in a press briefing at company offices here, said Dell intends to take advantage of
tumbling component prices in a slow economy to get a bigger bite of the computer market and
perhaps knock out some of the competition.
"This is going to be Bosnia," he said. "Our game is to go play hardball. Why not?"
He said component prices, pressured by falling demand, are dropping by about 1 percent a
week, putting Dell and its direct sales model in the catbird seat.
The company is able to pass falling prices along to customers within three days, vs. as many
as 60 days for competitors, because it keeps virtually no inventory, Vanderslice said.
"This is not a price war; it's a cost war," he said. "Who knows what the end game is, but when
you're grabbing up market share like this, it's the chance of a lifetime."
In two days of presentations to reporters, Dell executives said the company has set its sights
on grabbing the top spot in the server and storage markets.
Compaq Computer traditionally has been the world's top server maker, but Dell announced
earlier this month it had taken the lead in the U.S. market on a units-shipped basis.
"We're pricing to capture footprint (market). Once we capture the footprints, we have pretty
good evidence that we keep the account," Vanderslice said.
Vanderslice said Dell has nearly $8 billion in cash, which he would like to use for a "strategic
acquisition."
Typically, Dell executives have expressed reluctance to buy other companies on grounds that
mergers usually fail. But Vanderslice said Dell will keep an eye out for possible purchases that
could even include companies not tied to a direct sales model.
The Dell culture is so strong, he said, "You've got expand it beyond the direct model." |
