Hon Hai lands big-ticket orders from Dell

Hon Hai Precision Industry Co., Taiwan's largest information-technology firm, has recently won big-ticket orders for printers from the U.S.-based Dell Computer Inc. for the first time ever and will begin shipping the products sometime next year.

Hon Hai, nevertheless, refused to confirm the Dell order, saying it is requested to keep silent on grounds of business confidentiality.

The world's largest producer of personal computers, Dell recently introduced a new type of laser printer with a price tag of RMB999 in mainland China, about 70% of that price offered by rivals Hewlett Packard and Epson for the same model. The low-priced laser printers launched by Dell in the mainland are targeted at household and SOHO (small office, home office) clients.

Faced with the head-on competition from Dell, Hewlett Packard said it has begun trimming personnel of its printer unit and will not merge it with a PC unit.

In the past, Dell mainly farmed out production of printers to such contract manufacturers as Fuji Xerox, Samsung, Eastman Kodak, and Lexmark. Of them, Lexmark subcontracted the production of printers to Funai, BenQ and Compal Electronics. Recently Dell is said to contract the production of the products to Hon Hai through Lexmark.

A domestic institutional investor noted printers would be one of Hon Hai's most profitable operation units next year as it has developed this area for a long period of time. Hon Hai will be able to provide one-stop shopping services to customers after joining the production field of printers.

Since its involvement in the printer market in 2002, Dell has seen its shipment of printers grow substantially due to direct-sale business model and contribution of its well-established PC unit. The company noted it would make all-out efforts to develop the printer market as brilliant outlook is looming for the years to come.

An industry analyst estimated Dell would be able to ship five million printers with sales reaching US$1.3 billion this year and it would be able to challenge 10 million units in shipment of printers with sales amounting to US$2.5 billion in 2007.

According to statistics prepared by an analyst to the industry researcher UBS, Hewlett Packard is still the largest vendor of printers with total shipment reaching 131 million units last year, followed by Dell with 6.2 million units. However, Dell now enjoys a 50% annual growth in shipment, much higher than rival Hewlett Packard.

source: CENS