Although Dell is moving away from cheap grey personal computers and has acquired a number of companies in the recent quarters to boost its technology portfolio, it does not seem that the company, which has over $13 billion in case may not be ready to purchase Advanced Micro Devices, as rumours suggested earlier this week.
"I think [our acquisition strategy] will be very similar to what you have seen us do in the recent history here, where we are looking for relatively smaller sized ingredient acquisitions where we can leverage them with our substantial customer access and distribution," said Michael Dell, the chairman and the chief executive of the company, during the most recent conference call with financial analysts.
On Monday rumours about possible purchase of AMD resurrected and some suggested that Dell, the world's third largest PC maker, may takeover the chip designer. It should be noted that Dell has never developed almost anything itself, but concentrated only on design and distribution. Still, in the recent quarters Dell has been pretty active with acquisitions. In case the rumours are correct and the transaction will happen, this will mark a major change of Dell's strategy. But Michael Dell noted that his company is no longer just a PC maker.
"Almost 66% of our gross margin now comes from server, storage, network services, software and peripherals. From that standpoint, the epicenter of the company has really shifted in terms of profitability to these other areas and away from the PC, which is now only about a third of the company’s margin," said Mr. Dell.
Advanced Micro Devices has a pretty interesting product portfolio: it develops various central processing units for desktops, notebooks and servers as well as graphics processing units for various types of computers. Unfortunately, AMD lacks technology for smartphones, tablets and some other promising form-factors, which makes it a less interesting target for consumer electronics companies. In fact, mobility products are crucial for Dell going forward.
"On smartphones and tablets, we were very pleased to introduce the new Venue and Venue Pro, which are Android- and Windows Phone 7-based 4.1" products. You will see us enter the 10" tablet space, with both Android "Honeycomb" and Windows later on this year. We think those will be reasonable platforms for us to participate more broadly in this space. We have also rolled out services for mobility because we see many customers really looking to integrate these mobility solutions into their environments, and that is a source of demand inside our services unit, and we're focused on helping customers address those needs," said the head of Dell.