HP/COMPAQ: Dell mum on merger, talks up China

Dell CEO Michael Dell appeared unfazed by the merger of Hewlett-Packard and Compaq Computer, looking instead to growth opportunities in China and other international markets during a speech in Hong Kong on Friday.

Speaking to the Hong Kong chapter of the Asia Society, Dell had little to say about the merger that drew most of the week's headlines. However, he could not help but offer a few jabs at his rivals.

While explaining a slide that demonstrated Dell's profitability and market share -- one that showed the eponymous PC maker ahead of its competition -- Dell said, "If you put the HP bubble and the Compaq bubble together, it's a bigger bubble, but it's still in the same place."

Asked during the question and answer period what his advice to HP CEO Carly Fiorina would be, Dell said, "We don't provide advice to our competitors."

Dell also brushed off lingering concerns that its trademark supply chain advantages would disappear once copied by other PC manufacturers, saying "What will the competitors do now that they've proved that they can't copy Dell?"

China figures big

He was more interested in discussing the company's push into China, where it has established approximately five percent market share in a market dominated by local player Legend Group Holdings Co. "In the Chinese consumer market, we have done well with aggressive pricing," he said, adding that his company had developed products specifically for the China market. The Smart PC, which retails for 4,998 renminbi (US$600) , was an example of that, he said.

The emphasis on China highlights a shifting focus towards international markets, he said. "If Dell's market share in other markets equaled its share in the U.S., our annual revenue would double," to approximately US$60 billion to $70 billion.

The timing was right to enter China, he said, noting improvements in logistics. "If you go back four or five years ago, it was much more of a problem then than it is now," he said.

When asked how the company would take on Legend, Dell answered obliquely, saying, "Our goal is to grow our market share, not to beat up on any one competitor." Dell currently operates an assembly plant in the Fujian provincial city of Xiamen, which moved some production facilities and capacity away from plants in Malaysia.

Mobile not a priority

Dell noted that the company had recently begun producing and selling Local Area Networking (LAN) switches in the United States and claimed that it captured five percent market share in the first five months of sales. However, when asked about any possible moves into wireless devices, Dell showed a reluctance to enter the mobile handset or PDA market.

"We look for markets that are big, are profitable, and have clear standards. Mobile is still in a bit of a sorting out process," he said. Dell also expressed doubts about the future of third-generation telecommunication networks. "Whether it's a good business or not is a very interesting question," he said.

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