Dell Explores Acquisitions to Widen Lead in Internet Servers

Dell Inc. (DELL) said it is exploring acquisitions to bolster its data center business, as the company aims to widen its lead in supplying computer servers that run the Web services of clients such as Google Inc. (GOOG) and Baidu Inc.

“We want to continue to bring innovation through acquisitions,” Amit Midha, head of Dell’s operations in the China and South Asia regions, said at a briefing in Hong Kong today. Dell is interested in buying “everything around data centers,” an area of business that is contributing half the company’s profit, he said.

Dell is gaining orders from Chinese Internet companies including Baidu, Tencent Holdings Ltd. (700), and Alibaba Group Holding Ltd. for computer servers underpinning search-engine, online commerce, and social-networking services, Midha said. Round Rock, Texas-based Dell is parlaying its experience in supplying technology to Google and Facebook Inc. in the U.S. to win in China, the world’s biggest Internet market by users.

Dell has about 70 percent of the market for servers running the data centers of so-called cloud services in the U.S., and about 60 percent of the market in China, according to Midha.

Demand from data center operators helped Dell more than double net income last quarter to $945 million from $341 million, the company reported this month. Dell bought data- storage company Compellent Technologies for about $800 million in February.

Dell, the world’s second-biggest maker of personal computers, plans to double the number of service centers in China this year to 2,000, Midha said. The company will also expand its sales network in the Asian country, at present comprising of about 15,000 outlets, Midha said.

China recently became Dell’s biggest market outside the U.S., Midha said, without specifying when that happened.

Dell will start selling a larger version of its “Streak” tablet computer later this year in China, where the company currently offers a model with a screen measuring about 5 inches, Midha said. Dell also plans to offer more smartphones in the country, he said.

To contact the reporter on this story: Mark Lee in Hong Kong at wlee37@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

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