Rumors that Dell might swoop on a large services player have followed the company since it announced its sales figures for its fiscal fourth quarter in February 2001, when it said it was considering ways of expanding its services revenue.

But Rollins said yesterday: It is very improbable that we would make a large acquisition – it’s never been on our radar. We think that the bulk of the profits in services are in the services element close to hardware. If you look at professional services, much of it is dying – customers are simply not buying them. A lot of the smaller professional services businesses have collapsed.

Of the latest rumor, that Dell might buy troubled Getronics NV, Rollins said: Getronics have got their own problems. Why would we want them?

However, he did concede that small services acquisitions could still be on the company’s agenda. It is less unlikely that we would make small acquisitions, he said. Small, ‘tuck-in’ entities, like Plural, who we bought last year.

Dell bought Plural Inc in May 2002. It was described then as, the first strategic addition to the Dell Professional Services organization, and…a key component of Dell’s foundation for building a broader technology consulting, application development, solutions integration and infrastructure professional services business. Plural offered services around Microsoft implementations.

Instead of major services acquisitions, Rollins said there are three elements to growing the company’s services business. First, it will continue to grow its own services team organically – it currently stands at 7,000 personnel. That services group is gradually moving up the food chain, too, offering services in areas like project management, server implementations and storage area network (SAN) services. Second, the company will consider those tuck-in smaller acquisitions. Third, there is the company’s partnership strategy. This is described as a virtual integration model. Existing partners include EDS, Unisys, NCR, and Getronics.

However, growing its services business is only one facet of the company’s growth strategy, said Rollins. Just as important is the company’s core desktop business, and an increasing focus on what it calls enterprise, by which it means servers, storage systems, and other data center hardware and related services.

There is also even more effort being applied to grow its European business. Where we have the highest market share gap is still Europe, where we’re behind the merged HP-Compaq, said Rollins. In the US and Asia-Pac we’re already ahead of them.

Last is the company’s move into the PDA market with the recent launch of the Axim X5. However, it will be a long time before revenue from this new segment will make a marked difference to Dell’s total sales: People like to write about [Dell’s recent PDA push] because it’s new, but it’s not going to change the shape of the company for a few years, said Rollins.

So far the strategy has worked to good effect. In its fourth quarter ended January 31 the company reported sales of $9.7bn, up 21% from last year. Earnings were 23 cents per share, an increase of 35%. Full-year net earnings were $2.12bn, on record revenue of $35.4bn.

Source: Computerwire