Michael Dell "wants to capture the recurring revenue from ink cartridges," says a Wall Street analyst.
Dell Computer Corp. is looking at getting into the printer business, according to a Wall Street analyst who discussed the possibility with company founder Michael Dell.
"He wants to capture the recurring revenue from ink cartridges in some fashion," said Andrew Neff, a market analysts Bear Stearns & Co. in New York, following a meeting with Dell Wednesday at the companys headquarters in Round Rock, Texas.
However, Neff acknowledged that the chief executive "clearly did not give a specific answer or any details" about what he was considering, and noted that Dell may be simply "trying to raise the competitive heat among printer vendors."
A representative for the computer maker had no comment on the report.
"Theres nothing new to announce," Dell spokesman Mike Maher said.
Currently, Hewlett-Packard Co.
is the undisputed market leader in digital printing, garnering nearly $20 billion in revenue last year from its sales of ink-jet and laser printers, digital copiers, and related supplies.
HP officials have said that nearly 25 percent of its printer revenues are tied to PC sales, underscoring the potential profits Dell, as the worlds second largest PC maker, might be able to tap if it could effectively package the two product lines as well.
Currently, Dell resells printers from HP, Epson America Inc. and Lexmark International Inc.
Although Dell could dive into the ink business by buying a company such as Lexmark, Neff said Dell has previously avoided making such large acquisitions. Instead, he said, its more likely the company would seek a rebranding agreement with a printer manufacturer that would allow it to sell machines with the Dell name, or else negotiate to tap more revenue from the printers it resells.
At Dells spring analyst meeting last month, Robertson Stephens analyst Eric Rothdeutsch asked company executives about rumors he had heard that Dell was negotiating a new business deal with Lexmark. In response, Dell President Kevin Rollins would only confirm that the computer maker was holding talks with several printing vendors, but offered no details as to what those discussions involved.