Drew -
If Dell continues to grow at 4-5 times the industry average, it will surely be number 1 in no time.
That's the same assumption that says Dell will continue to build server business at 200% - in one year that server growth rate dropped to 75%, and in another it will be closer to 50%. As Dell's participation in a market grows, the growth rate will inevitably drop.
There are three things wrong with your assumption about Dell's overall growth.
1) It assumes the other players stand still, and they don't. Over the last 3 years CPQ more than tripled, and CPQ was the dominant player when they started that run. Dell went from #8 to #4, and CPQ went from #4 to #2.
2) It assumes that Dell grows across the board. They are already seeing a slowing in growth in the desktop business, which has caused them to concentrate on the server and workstation markets. But the cost of entry in those markets is much higher, which is why the big players have not seen much share loss there compared to desktops. Dell lacks the engineering and services components to rapidly penetrate those markets.
3) It assumes that their competitors will treat them the same way now as when they were the #8 player. Look at what happened to Packard Bell - they were #1 in desktops, now where are they? Dell has not really faced fierce competition until this year.
So I feel confident in saying Dell will be lucky to get into the top 3. I don't see it happening, Dell is no match for HP today, and they will not catch CPQ or IBM any time in the next 10 years, if ever. |
