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DELL

Dell wants its name to ring from the desktop to the data center. One of the world's top suppliers of PCs, the company offers a broad range of technology products for the consumer, education, enterprise, and government sectors. In addition to a full line of desktop and notebook PCs, Dell offers network servers, data storage systems, printers, Ethernet switches, and peripherals, such as displays and projectors. It also markets third-party software and hardware. The company's growing services unit provides asset recovery, financing, infrastructure consulting, support, systems integration, and training. Dell generates nearly half of its revenues outside the US.

Dell's profit margins, never large in good years, were under pressure in fiscal 2010, as the global recession forced down sales of computers and consumer electronics. The company's sales were off by about 13% from the year before, while profits tanked by around 42%. Dell saw weaker demand from both commercial and consumer customers during the year. Its financial services line of business was negatively affected by loan delinquencies and defaults. The recession was challenging enough, yet competitors were continually coming after Dell's market share. With its extensive line of netbook computers, Acer is dueling with Dell for second place in the worldwide PC market. Dell continues to control costs as part of its efforts to remain competitive.

In 2009 Dell acquired Perot Systems for about $3.9 billion in cash. The transaction allows the company to deliver a broader range of IT services, particularly to clients in the US. Dell will be able to sell more computers to Perot clients through the combination. The company made its move a year after PC archrival Hewlett-Packard acquired the much larger Electronic Data Systems (EDS), the outsourcing services pioneer founded by Ross Perot Sr., who established EDS in 1962 and Perot Systems in 1988. The deals indicate the growing importance of the IT services industry to computer manufacturers, as IBM Global Services and EDS (now called HP Enterprise Services) are among the leading providers of technical services in the world. Dell formed a new organization, Dell Services, with the purchase of Perot Systems.

Dell is also looking to boost its Advanced Infrastructure Manager (AIM) system, which simplifies data center management using a virtual integrated system of servers, storage, software, networking, and management tools. In June 2010 the company agreed to buy privately held Scalent Systems for an undisclosed amount. Scalent makes software that is used to enhance scalability and efficiency in data center infrastructure, providing the critical software component for AIM when combined with Dell servers, storage, and networking products. Dell has been using Scalent's software in its Dell AIM system for customers such as Blackboard, who use it for their managed hosting services.

Michael Dell pioneered the direct-sales model for computers and took the company from his dorm room to the top of the PC heap by keeping it focused on a simple formula: Eliminate the middleman and sell for less. Dell's built-to-order boxes allow for lower inventories, lower costs, and higher profit margins -- elements that have served it well through PC price wars and IT spending recessions. Though direct sales remain the core of Dell's business, a broader strategy has emerged since the company's founding father returned to the helm in 2007.

Faced with slowing sales rates in the domestic PC market, Michael Dell oversaw an aggressive campaign to reposition the company for growth. Most significantly, Dell shifted its sales approach. After years of watching competitors attempt to emulate its success with the direct-sale model, Dell expanded its channel sales. Prior to 2007, Dell had practically no retail presence. Since then, the company has partnered with stores such as Best Buy and Wal-Mart, as well as with systems integrators, resellers, and distributors worldwide.

The company is looking to international revenue from developing markets such as Brazil, China, India, and Russia to supplant weak sales in the US. The company also looked overseas to find operational cost-saving opportunities. Based in Singapore, Dell's Asia/Pacific segment includes manufacturing and distribution units in China, India, and Malaysia. The company made major investments in its call center and development units in India. Closer to home, the company closed its Austin, Texas-based desktop PC manufacturing facility in 2008. It also shuttered customer care centers in Canada. In 2009 Dell sold its plant in Poland to Foxconn Technology, a unit of Hon Hai, the world's largest contract electronics manufacturer, and contracted with Foxconn for manufacturing services.

Generating more than half of its sales from desktop and notebook PCs, Dell faces intense competition in the consolidating market it shares with Acer, Hewlett-Packard, and Lenovo. The company built its fortune with the "Wintel" platform (Microsoft's Windows operating systems, Intel microprocessors) as its foundation, and while that combination remains its bread and butter, Dell also offers chips from AMD and a version of Linux as options on some of its PCs. The company's PC sales are following an industry trend that favors mobile computers; Dell's notebook line, its largest revenue generator, accounts for almost a third of its sales. The company also made additional efforts to spur sales with high-end devices. Dell's gaming and multimedia PC offerings include its XPS and Alienware lines. It debuted a luxury laptop called Adamo in 2009.

Far from limited to PCs, the company also provides servers, storage devices, and networking equipment. As with its PCs, Dell's servers are primarily Wintel devices, but it supports versions of Linux from both Red Hat and Novell on select servers, as well as the Solaris operating system. Dell's storage line includes the PowerVault systems and devices from EMC. In 2010 Dell bought Ocarina Networks, a privately held data storage company with technology that compresses images and other data, freeing up storage space. Not only will Dell will use the technology in the storage systems it sells, the company plans to use Ocarina's technology to complement its EqualLogic data storage product lines (acquired in 2008).

In 2009 Dell launched a portfolio of 14 new products -- including servers, workstations, storage systems, and third-party IT management software -- aimed at lowering costs in corporate data centers. The integrated product line competes with the comprehensive offerings of its chief rivals in the enterprise market, HP and IBM. Also that year the company made its long-rumored entry into the smartphone market, debuting a wireless handset called the Mini 3, which is based on the Android mobile device software created by Google. Dell will distribute the phone through China Mobile, which has more than 500 million subscribers, and Claro, a unit of América Móvil that serves more than 42 million customers in Brazil. It also struck a deal for AT&T to carry the phone in the US. The Android software is being utilized by a number of smartphone manufacturers, including HTC, LG Electronics, Motorola, and Samsung Electronics.

The company's software and peripherals segment encompasses Dell-branded displays and printers, as well as third-party peripherals, consumer and enterprise software, digital cameras, printers, and televisions. Though not as acquisitive as some of its rivals, Dell made targeted purchases to grow its product line and service capabilities. In 2008 the company acquired MessageOne, a provider of managed email management and archiving services, for $155 million in cash. MessageOne, which was founded by Michael Dell's brother, Adam, was integrated into Dell's global service organization.

Michael Dell owns about 12% of the company.

Canon

Canon is still banging away at the document reproduction market. The company makes printers and other computer peripherals for home and office use. Its other well-known lines include copiers, fax machines, and scanners. Canon's industrial segment features products used in such diverse applications as semiconductor manufacturing equipment, television broadcast lenses, and devices used for eye examinations. Canon still operates its original camera business, which makes digital cameras, camcorders, LCD projectors, lenses, and binoculars. The company, which generates about three-quarters of its revenues outside Japan, continues to emphasize its product development and marketing efforts in Europe and North America.

The global recession took its bite from Canon's sales, which fell by nearly one-quarter during 2009. The company posted its lowest profit in a decade as a result. While Canon operates in highly competitive markets in consumer, industrial, and office products, its brand retains a significant presence around the world. Counterfeiting of Canon products is on the rise, and the poor quality of many counterfeit products could affect the company's brand image and operating results. Canon depends on a small number of large distributors to circulate its products in Europe and North America; those distributors could play a role in reducing the company's power over pricing in those regions. At the same time, the proliferation of Internet-based retailers may make conventional distribution channels obsolete.

Canon's office products, its largest segment, include printers, copiers, scanners, and multifunction devices for the consumer and enterprise markets. Canon sells branded products and supplies partners that resell under their own brands. Partner/competitor Hewlett-Packard accounts for approximately 20% of its sales. The company is targeting color office products for growth in this segment.

Perhaps still best known for its cameras, Canon has seen its photographic business steadily decline. However, the company remains a leader in the digital camera market, where it is concentrating on high-end single-lens-reflex (SLR) devices. Industry, Canon's third primary product group, encompasses a diverse portfolio including semiconductor production equipment, LCD components, medical imaging equipment, lenses, and large-format printers.

Canon adheres to the "kyosei" philosophy (living and working together for the common good), which stresses respect for local cultures and customs and more local control of subsidiaries. Customers in Europe account for nearly a third of its revenues. Accounting for almost 30% of sales, its next largest geographic segment, the Americas, is served by subsidiaries including Canon U.S.A. and Canon Canada.

In 2009 Canon agreed to acquire Océ, Europe's largest manufacturer of printers, to solidify its position in that key geographic market. The company would maintain the Océ brand following completion of the proposed transaction, operating the Dutch supplier of office machines as a division of Canon.