BEIJING, July 31 /Xinhua-PRNewswire/ -- CCID Consulting, China's leading research, consulting and IT outsourcing service provider, and the first Chinese consulting firm listed in Hong Kong (Hong Kong Stock Exchange: HK08235), analyzed the strategy shift of Dell from PC to IT services and raised suggestions for domestic PC makers.
Michael Dell, founder and executive president of Dell, once said that Dell's IT businesses grew faster than its traditional PC businesses and had huge growth potentials. He said that in addition to natural growth, his company may also make strategic M&As in the future to improve service ability and increase service revenues. He pointed out that Dell may provide IT services to boost its PC equipment sales and the services provided may include: assisting companies to install new equipment, and setting up consulting technical service desks for employees.
In June 2002, Dell acquired Plural, a technical consulting and application development firm in New York, which mainly provided Windows NT- and Windows 2000-based E-business and consulting services. At the end of 2006, Dell acquired ACS, an IT service company, which mainly offered services in the government, fiscal and financial fields. Dell's acquisition was chiefly to take advantage of ACS' service network and provide customers with application consulting services. For example, Dell will provide purposeful services to users who plan to upgrade to Microsoft's Vista system.
As competitions intensify today, price drop has been a continuous trend in the PC industry, and profit margins are further squeezed. Economies of scale and brand advantages are vital to PC makers' survival. This is also one of the reasons for continuous large-scale M&As in the PC industry in recent years. Though PC giants like Dell have certain advantages in supply chain management and cost control and also have server and storage businesses and product lines, their diversified development lacks breadth and depth. Their business focus is still on PC products. To a great extent, this has affected Dell's development, resulting in a drop in profit.
None of DELL's several M&As involves very big businesses or amount. All are cautious and exploratory strategic M&As. Through the words of Mr. Michael Dell, CCID Consulting thinks that for a certain period of time in the future, Dell may improve its professional IT service ability, expand its business scope and increase profits through further M&As. In 2006, Dell's operating revenues reached $60 billion. But, only 10%, namely $6 billion, came from IT services. Just as Michael Dell said, IT services have huge potentials and a big room for growth. To a certain extent, IBM sold its PC business to Lenovo because the profit margin in the PC industry had been squeezed. But, professional IT services are a blue sea and have a broad room for growth.
CCID Consulting thinks that Dell's strategic thoughts may also have certain implications for PC enterprises in China. As the Chinese economy grows fast, China has become the 2nd largest PC market in the world. Due to low technical barrier in PC industry, there are many PC makers in China. Resources allocation is dispersed and the advantages of scale are not notable. International PC giants have shown great enthusiasm in the "big cake" of the Chinese market. Intensified competitions and elimination have resulted in a series of M&As and restructuring involving foreign companies and domestic PC firms. By acquiring IBM's PC business, Lenovo has opened an unprecedented footprint for Chinese enterprises to take the internationalization road, and wins for China precious economic competitiveness in a global environment and respect from other countries. Due to their size and strength, other domestic PC firms may still wait for some time to carry out cross-national M&As, and set up multinational companies. But, domestic PC firms can still expand their product lines and increase market shares by small-scale and strategic M&As. Through acquiring some service-type IT enterprises, they can strengthen and improve their IT services, open new profit space and achieve sustainable growth.
About CCID Consulting
CCID Consulting Co., Ltd. (also known as CCID Consulting), the first Chinese consulting firm listed in the Growth Enterprise Market of the Stock Exchange (GEM) of Hong Kong (stock code: HK08235), is a direct affiliate of the China Center for Information Industry Development (hereinafter known as CCID Group). Headquartered in Beijing, CCID Consulting has so far set up branch offices in Shanghai, Guangzhou, Shenzhen and Harbin, with over 300 professional consultants and industry experts. The Company's business scope has covered over 200 large- and medium-sized cities in China. Apart from home market development, CCID Consulting is establishing international cooperation links across the United States, the Asia-Pacific region and Europe, by setting up agents in the U.S., Japan, South Korea, Australia, Singapore, Italy and Russia, with the aim of going global.
Based on four major competitive areas of powerful data channels, industrial resources, intense knowledge and deep understanding of information technology, CCID Consulting provides customers with consulting, research and IT outsourcing services covering strategy planning, IT application, marketing strategy, human resources and information technology outsourcing. Our customers range from industrial users in IT, telecommunications, energy, finance, automobile, to government departments at all levels and diversified industrial parks.
CCID Consulting is committed to becoming the No. 1 brand for strategy consulting, the No. 1 consultant for enterprise management and the No. 1 expert in market research. For more information, please visit our website at http://en.ccidconsulting.com/ .
For more information, please contact:
Jia Fan
Coordinating Manager
CCID Consulting Co., Ltd
Tel: +86-10-8855-9012
Email: fanjia@ccidconsulting.com
