Dell Must Get In Takeover Mode

But with $12.3 billion in cash and investments on its balance sheet, Dell's consumer ambitions are not limited to what it cooks up in house. And because the ongoing SEC accounting investigation has temporarily halted Dell's share buybacks, the cash isn't being put to use.

Roger Kay, president of the research firm Endpoint Technologies, expects Dell to start making more acquisitions.

But he questions how much benefit there is to buying new technology in the standardized PC business.

From an innovation standpoint, there isn't that much value in a PC company, says Kay, who believes that the real value is in the design team. "If you wanted those design resources, you'd be better hiring those individuals than buying the whole company," he says.

That said, even R&D heavyweight Hewlett-Packard(HPQ Quote) regularly looks outside the company for new ideas and technology to differentiate its PCs.

H-P recently displaced Dell as the world's No.1 PC maker.

Since Michael Dell returned to the CEO spot in January though, Dell's stock is up roughly 19%, as investors look for the PC maker to get back on track. Dell's shares set a 52-week high Monday, hitting $28.98 in midday trading.

Dell's Pearson says the company is interested in doing some M&A deals going forward, though he says the company is thinking about potential acquisitions that fit into its services business.

Dell has already shown a willingness to look outside its walls for innovation in the consumer market, acquiring Alienware, a maker of video game PCs, in 2006. In that case, the idea was to marry Alienware's innovative products with Dell's operational efficiencies and purchasing power.

As Dell seeks entry into new consumer markets, such as handheld gadgets, smartphones or ultramobile PCs, the Alienware merger could prove a worthwhile blueprint for future deals.