Dell slams expected IBM-Lenovo deal

IBM executives looking for a buyer for their company's PC business most likely did not spend time in Round Rock, Texas. Speaking at a press conference at OpenWorld on Tuesday, Dell founder and Chief Executive Officer Michael Dell said that his company's U.S. facilities give them an edge against other North American vendors.

IBM is reported to be in discussions to sell its PC business unit, or parts of it, to China's Lenovo Group. Industry sources say that an announcement about the deal could happen late Tuesday or Wednesday. Dell addressed the issue in response to questions about the expected announcement.

"We have not really grown our company by acquisition," he said at the San Francisco event. "We like to acquire competitors one customer at a time."

In an industry largely seen to be in the midst of consolidation, Dell has avoided making acquisitions, largely because the company's founder views this as a "healthier and more sustainable" way to grow. "When was the last time you saw a successful merger or acquisition in the computer industry? It hasn't happened, at least not in a long, long time," Dell said.

Though Dell posted record numbers during its most recent financial results, the company's two largest competitors -- Hewlett-Packard and IBM -- have struggled to turn a profit selling personal computers.

Dell attributed his competitors' problems to outsourcing.

"It's been a long time since our leading competitors actually made a computer," he said. "They have outsourced manufacturing computers a long time ago, but Dell continues to invest heavily in the manufacturing and design of computers."

Last month, Dell announced plans to open a third U.S. manufacturing facility in North Carolina. The company already has U.S. manufacturing operations in Austin, Texas, and Lebanon, Tennessee.

Moving facilities offshore may have seemed appealing during the industry-wide sales slump of the last few years, but it has left some companies at a disadvantage as demand picks up again, Dell said.

Dell has some first-hand experience in the problems that can accompany offshoring. A year ago the company moved customer support operations for its Optiplex desktops and Latitude notebooks back to the U.S. after corporate customers complained about the quality of service they were receiving from international facilities.

Dell, however, does have a number of manufacturing facilities located outside the U.S., including factories in Ireland, Malaysia, China and Brazil.

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Robert McMillan

IDG News Service
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