Just a Ranking

Losing the No. 2 spot to Acer is not the death knell that some may believe. In fact, the ranking may be a dubious distinction because it’s based solely on the number of devices sold.

Acer’s sales largely consist of low-priced devices such as netbooks or stripped-down laptop computers. While bolstering the company’s sales ranking, low-margin sales generate moderate revenue.

Last year, Dell posted $61.1 billion in revenue compared with Acer’s $16.6 billion.

“As we’ve said for some time,” Dell spokesman David Frink said, “we’re focused on profitable growth, not simply [market] share results.”

Dell is scheduled to announce its third-quarter results on November 19.

Company chief financial officer Brian Gladden has said the Perot Systems deal isn’t expected to generate significant business for its personal computers.

“From a financial-modeling standpoint, we have assumed very little in the way of hardware pull through this transaction,” he said in a call with analysts last month. “Not that we won’t work that and obviously try and make that a benefit, but…in the grand scheme of revenue opportunities here, we think that is one of the smaller ones.”

Dell officials initially said the North Carolina plant was being shuttered to simplify operations and improve efficiency. The company has been attempting to reduce annual operating costs by $4 billion.

But further details came to light in a Trade Adjustment Assistance Act petition that the computer maker filed with the U.S. Department of Labor.

“Our work volume is being transferred to a global manufacturing network,” Dell reported in the filing. “The work will be given to third-party providers who operate in Mexico and other countries around the globe.”

Round Rock city manager Jim Nuse said Dell’s diversified business may benefit the city if it strengthens the company. But it’s unclear how the shift will affect local jobs because Dell officials don’t share long-term plans with city officials, Nuse said.

The region needs to diversify beyond manufacturing jobs to clean technology and biotechnology in preparation for any shift that occurs at Dell, said Joe Vining, senior vice president of the Round Rock Chamber of Commerce.

“The reality is that manufacturing is cheaper overseas,” Vining said. “As more and more jobs are lost overseas, it’s incumbent upon us to keep up with the workforce.”

Gartner’s Fiering credits Michael Dell with recognizing that to remain profitable the company has to go upstream rather than compete with high-quantity, low-margin manufacturers.

“It’s a game of scale and pennies on the dollar,” she said. “Michael Dell saw the writing on the wall that PC hardware as a commodity is going to the low-cost manufacturer that can grind out the volume.”