Have you ever had someone set you up on a date that you really didn’t want to go on?  It usually isn’t any fun and leaves you wondering how you’ll ever be able to get that time back.  Wall Street is trying to do something similar between Dell and Acer.

Over the last few years Dell has been going downhill.  They used to be a Wall Street darling wowing investors with their ability to squeeze profits and ship their computers all over the world.  Once HP and Compaq figured things out they took Dell’s number one spot and never looked back.  From then on Dell hasn’t been able to quite get things right, even after buying a bunch of companies and even changing their model to start selling their computers in retail outlets.

Acer on the other hand has been on a tear.  By focusing on lower end computers with brands like Gateway and eMachines they were able to grow and take share both in the US and internationally away from companies like Dell, Sony, and Toshiba.  With the increased popularity of netbooks Acer has been able to take Dell’s number two spot in terms of computer sales.

Ironically, netbooks are the same reason why Dell would likely never consider buying Acer.  Netbooks are a loss leader for computer manufacturers.  Since they already have a low price, it’s almost impossible to squeeze any profit margin out of them.  In computers, margins is the name of the game and not having any is dangerous since you could sell $10 billion dollars worth of equipment and not be guaranteed to have a profit to show for it.

[Source: Taipei Times]

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