HP's exit from PCs? Dodgy for them but good news for us, says Michael Dell

Dell founder thinks spinning off the PC division could damage sales in other parts of HP's business…
Written by Nick Heath, Contributor

Dell founder thinks spinning off the PC division could damage sales in other parts of HP's business…

Dell CEO Michael Dell

Dell CEO Michael Dell welcomed HP's announcement that it is planning to spin off its PC divisionPhoto: Hartmann Studios

Michael Dell, CEO of computer maker Dell, has questioned the wisdom of competitor HP's plans to spin off its PC manufacturing business.

Dell said HP's announcement that it wants to spin off its personal systems division is good news for Dell but could damage sales in other parts of HP's business.

"Sometimes the ball bounces in your direction and really great things happen to us that we have no control over. This happens to be one of the best ones," Dell said at the Salesforce.com Cloudforce event in London on Wednesday.

Dell highlighted sales of HP servers as one area that could suffer if HP decides to stop making and selling PCs.

"In the supply chain there are tight integrations. A lot of customers like to buy servers and clients from the same company," he said.

HP's manufacturing costs for its other products could rise if the spin-off means it no longer purchases components to build PCs, Dell said, because HP's ability to benefit from bulk-buyer discounts would be reduced.

"Ninety-five per cent of disk drives are in PCs, set-top boxes and a few other devices. The same is true for microprocessors and memory chips," he said.

"You go from being one of the largest buyers of those components in the world to not being in the top five in the world, that raises the cost of products to customers."

An HP spokesman said it is premature to make judgements on how any spin-off of its PC division will affect the rest of HP's business until HP announces the outcome of its review into the future of its PC division.

"There are no foregone conclusions at this stage on the spin-off and the nature of its relationship with HP, as these details have not been finalised," he said.

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