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Tablets are only part of the problem for Dell

While Michael Dell's offspring have drawn the ire of the executive's $2.7M USD family security detail, thanks to some indiscrete postings picked up by "Rich Kids of Instagram", Mr. Dell himself has face equally embarrassing numbers from his struggling firm's financials and sales.  

I. Dell Faces Tough Questions, Says Windows 8 is the Answer to Everything

Dell, who says it's "no longer a PC company" is surely performing like a company who's out of touch with consumer PC sales.

In Q2 2012, Dell, Inc. (DELL) fell into roughly a tie for third place with Taiwan's Acer, Inc. (TPE:2353) after fast-growing Lenovo Group, Ltd. (HKG:0992) booted it from its perennial second-place spot behind Hewlett Packard Comp. (HPQ).  That sales fall resulted in a 22 percent plunge in consumer sales revenue and 8 percent overall revenue drop, despite a good quarter for the enterprise unit.

Michael Dell
Michael Dell's company has stumbled into a tie for third place. [Image Source: Forbes]

But CFO and senior VP Brian Gladden is convinced Microsoft Corp.'s (MSFT) Windows 8 will bail out his chief's struggling firm.  He commented to investors in a call:

You'll see new Windows 8 ultrabooks, all-in-one tablets and converged devices in the fourth quarter and headed into next year.

It's not clear what Dell means by "all-in-one" or "converged devices", but he was probably talking to hybrid tablets -- tablets with a keyboard (which may or may not be removable).  Also unclear is exactly how Dell plans to differentiate itself from its rivals; Lenovo, HP, and Acer are most definitely pushing Windows 8 product too.

Dell tablet
Dell thinks Windows 8 will be sweet salvation. [Image Source: Storage Look]

II. Editorial Blasts Dell as "Done"

In an editorial carried by ReutersSlate magazine staffer Farhad Manjoo writes "Stick a fork in it: Dell is done."

The opinion columnist comments that Dell is suffering an "existential threat", continuing:

However ugly your life gets, just try to put yourself in Michael Dell’s shoes. Imagine what that’s like. Picture yourself at the helm of a company that rakes in $60 billion in annual revenue — and then watch the money evaporating, floating away on a post-PC cloud. You built this company on the theory that computers were a forever-business, that the world would never fall out of love with the PC, and that you would be the guy to supply their fix.

The tragedy is that you were right: The world will never fall out of love with the PC. The PC is still riding high, the PC will be bigger than ever. What blindsided you is how the word “personal computer” would come to be redefined.

The overall premise of the column is that the rise of the tablet is killing Dell.  Mr. Manjoo mocks Dell's sales chief's nebulous remarks on his company's tablet timeline from earlier this year, in which he stated, "We have a roadmap for tablets that we haven’t announced yet."

While the criticism may be fair, it's equally important not to neglect that Dell is also failing in traditional PC sales -- a topic Mr. Manjoo surprisingly overlooks.

Dell Streak
Tablets, like the ill-fated Dell Streak, are only part of the problem for Dell. [Image Source: Engadget]

Looking at Gartner, Inc.'s (ITreport and the IDC Group report for Q2, one company that jumps out is ASUSTek Computer, Inc. (TPE:2357) who stole the crown for fastest growth from Lenovo (who continues to grow pretty fast itself).  ASUSTek -- which has a stable of drool-worthy Windows 8 laptops, tablets, and hybrids waiting in the wings -- grew at a 40 percent clip on a year-to-year basis.  A few more quarters like that -- and a few more quarters like Dell's -- and the U.S. PC giant may find itself in fifth place in global sales.

That would be a stunning fall for Dell, which vied for the top spot in global sales for so long.

It's clear tablets are only the start of Dell's problem.  From shady sales tactics to a floundering web presence, the problems at Dell are numerous across the board.  Dell may look to Windows 8 for salvation, but its failure to execute with current generation designs, inspires little faith that it will be able to execute in the next generation Windows era.

Sources: Seeking Alpha, Dell, Reuters



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RE: Where was Dell...
By kleinma on 8/22/2012 3:53:30 PM , Rating: 1
Don't know know people want revolutionary new operating systems, but don't want to learn anything new. So they want something new, but it needs to be exactly how it was before. Then MS will be able to please everyone.


RE: Where was Dell...
By retrospooty on 8/22/2012 4:05:51 PM , Rating: 5
" but it needs to be exactly how it was before. Then MS will be able to please everyone."

This would be quite simple. Enable the old start menu as an option for those that wanted it. It's not like it cant be done. The original Windows 8 develper preview had it. MS took it out on purpose.


RE: Where was Dell...
By Master Kenobi (blog) on 8/22/2012 5:22:51 PM , Rating: 2
It would be trivial to patch the start menu back in and some customization options to boot straight to desktop. Those two small things would get many Windows 7 users to jump to Windows 8 since it is cheap and has some nice under the hood upgrades.

I'd be willing to bet slow uptake from businesses, which won't even waste their time with Win8, and the technical comunity at large will force them to put it back in SP1 or in Windows 9. As it is currently Windows 8 is going to have a long uphill battle even at its low price point.


RE: Where was Dell...
By SoCalBoomer on 8/22/2012 6:14:30 PM , Rating: 2
That's actually what I do already.

Little program called vistart brings in my start button. With that, it's every bit as easy as Win7. I hardly ever get into the tiled interface. . .


RE: Where was Dell...
By retrospooty on 8/22/2012 6:44:22 PM , Rating: 4
I was kind of bummed out... The other day I downlaoded server 2012 and put it on a test system so I can get to know it before deploying it for our Hyper V/Sharepoint implementation... It has no start menu either. Tiles on the server ugh...


RE: Where was Dell...
By wordsworm on 8/22/2012 7:44:29 PM , Rating: 3
I'm thinking Windows 7 will be MS's last dominant OS. They're going to start tanking hard-core. They completely lost it in the server market to Linux, and now they're going to lose it to Google and Apple. I wonder if Google will be ready to offer a reasonable alternative to Windows when Win8 comes out.


RE: Where was Dell...
By arazok on 8/23/2012 11:59:30 AM , Rating: 1
quote:
They completely lost it in the server market to Linux


AaaaaaHAHAHAHAHHAHAHAHAHAHAHA! Whew, that was good for a laugh...


RE: Where was Dell...
By retrospooty on 8/23/2012 1:06:04 PM , Rating: 3
Ya, I am not sure what that meant either. I am a network admin, and believe me MS dominates the server market, by a landslide and its not going to change any time soon. There is no way a Linux distro will get the product support and app support that MS provides. MS isn't going anywhere.

I do get his point in the consumer market that Win8 wont go over too well... But MS does that. XP, awesome (at the time) Vista, flop. Win7 Awesome. 8, probable flop. Win9, will fix whatever problems Win8 caused, whether bugs, UI, customer perception, or otherwise. It's how MS operates, and they have time and money to get it right.


RE: Where was Dell...
By arazok on 8/23/2012 1:34:35 PM , Rating: 3
I actually think WIn8 is going to launch bit of a consumer revolution for MS. Us techies don’t like the missing start button, which has its merit, but the average consumer couldn’t handle the start menu’s complexity anyways.

I know that any time I help my computer illiterate friends with things, I’ve had the most success by adding desktop shortcuts to whatever interests them. Start – Pictures is too hard for some people – but add a shortcut to the desktop and I never hear from them again.

I think Metro’s going to be a huge hit in the consumer space. I personally can’t wait to be able to access my home server’s media library from my Win8 phone or Slate. Things I can’t do with an Android or Apple device. Microsoft suddenly has a whole line of products that will integrate with each other seamlessly. Something Android can’t touch, and Apple demands you hand everything over to iTunes to do.


RE: Where was Dell...
By retrospooty on 8/23/2012 3:11:12 PM , Rating: 2
"I actually think WIn8 is going to launch bit of a consumer revolution for MS. Us techies don’t like the missing start button, which has its merit, but the average consumer couldn’t handle the start menu’s complexity anyways."

That is a very good point. Most of the people complaining about the UI are us techies. Most people just want to point and click and have it work without having to need to call for help from a techie (we can be quite annoying).


RE: Where was Dell...
By 91TTZ on 8/23/2012 3:01:19 PM , Rating: 3
I work with servers all day long and I can assure you that Microsoft hasn't lost that market. Probably 90% of the servers here run Windows.


RE: Where was Dell...
By Taft12 on 8/23/2012 5:20:12 PM , Rating: 2
quote:
I work with servers all day long and I can assure you that Microsoft hasn't lost that market. Probably 90% of the servers here run Windows.


0% of the servers here run Windows. Different people run in different circles. I'm sure you've spent as much time looking for UNIX admin jobs as I've spent looking for Windows. I assure you there's plenty of both!


RE: Where was Dell...
By arazok on 8/23/2012 7:55:59 PM , Rating: 3
Reall big IT companies like Google, and some really small IT companies tend to shun Windows because the licencing costs are expensive, and they tend to have the specalized knowledge needed to run platforms like Linux. Thats probably 10% of the market. 90% of servers in 90% of the rest of the market, run windows.


RE: Where was Dell...
By perspicacity on 8/28/2012 8:36:11 AM , Rating: 2
Linux != UNIX


RE: Where was Dell...
By Cerin218 on 8/22/2012 6:24:47 PM , Rating: 1
Yeah they did. Because it is unnecessary. I said it, you don't need it. All you whiners seem to feel that the Start Menu is the only way to do anything in windows. Win8 is tile based. Programs have a tile on the start screen. It's a whole screen. You mash a tile with your greasy sausage finger to open a program. Works WONDERFUL on my Windows 7 Phone. Work gave me an iPhone and I hate it, it sucks. 7 second battery life and dumb icons on the screen. All Apple has going for it is apps. If you MUST get to a desktop, mash the DESKTOP Tile. I have a quick launch on the desktop that has all my useful programs. Or icons on the desktop. Tiles can give you so much information from a program right on the start screen. You would do nearly as well whining about ribbons in Office rather than a menu bar. Learn how to do something new. Realize what Microsoft already gets, that tablets are the future. Apple has pretty much shown that. They took it out so the whiny dinosaurs would get used to something new. Same way some computer manufacturers don't put PS2 connectors on their computers anymore. Because we moved past that.You don't like it because it's different and it's too much for you to comprehend.


RE: Where was Dell...
By ChronoReverse on 8/22/2012 7:06:15 PM , Rating: 3
Well having a visible target is nice.

For example, on the phone:
(Windows 7)
"Hi mom, so click Start then All Programs..."

(Windows 8)
"Hi dad, so move your mouse to the bottom left corner and then click. Click what? Doesn't matter, just click after your mouse reaches the corner. Nothing happened? Did you reach close enough to the corner that the little Start box appeared? Try moving the mouse cursor all the way to the bottom left this time..."

I hate it and I know it's going to happen.


RE: Where was Dell...
By robinthakur on 8/23/2012 5:17:25 AM , Rating: 2
Agree on this! This OS is so clearly designed for a single-screen tablet, I'm not really sure what the MS apologists are defending. If as me you have multiple screens, trying to even hit the top right corner to open up the settings etc. is an absolute pain.

It's quicker and easier to go to desktop, open the network sharing center and then navigate back to Control Panel. Likewise you need to hit the settings menu to sleep or shutdown the computer, and this should have been placed with the user info in the top-right of the start screen along with switch user or sign out. Who would have though you'd be thankful for the Network sharing Center!

You have a settings "App" as well as control panel and this is absolutely confusing. IE behaves differently depending on whether you launch it from the Start screen or the desktop, and the tiles of open apps in the top left is weird. How do you even close them? Not a clue. The only guidance upon starting up Windows 8 for the first time, is "Learn to use the corners" and they seem to think that the rest is common sense.

Having this kind of environment in a business (much less on a server) is utterly pointless because it is designed to be a flashy start menu to compete with the Apples of this world, yet fails to understand why they have been successful. On a tablet, it is a mildly exciting prospect, until you realise that most of the stuff to take advantage of the fact that you are essentially running Windows would take place on the desktop.

I currently dual boot Windows 8 and Mountain Lion, and I have to say I'm spending more time in OSX for the first time. These days it runs all of the Apps I need and it properly integrates with my other iOS devices and iCloud. My development environment for VS and SharePoint runs in a virtual box instance and this works really well. I frankly see little reason to go back to a Windows which is now poorly optimised for desktop computing and worse, is almost completely alien. If you have to learn a new environment, why would you choose Windows?


RE: Where was Dell...
By ShaolinSoccer on 8/23/2012 5:21:41 PM , Rating: 2
quote:
How do you even close them?


ALT F4. Just like old Windows...


RE: Where was Dell...
By JediJeb on 8/23/2012 2:42:22 PM , Rating: 2
Can you use the tile interface to open five separate programs and stack them around on the screen so that you can move data from one to the other without ever having to minimize and maximize windows? If so then maybe it won't be all bad.


RE: Where was Dell...
By 91TTZ on 8/23/2012 3:10:33 PM , Rating: 2
quote:
You would do nearly as well whining about ribbons in Office rather than a menu bar. Learn how to do something new. Realize what Microsoft already gets, that tablets are the future.


I've been using Windows 8 every day on my laptop to give it a fair shot. It's attractive but really not optimized for desktops and laptops that don't have a touch screen. Microsoft thinks that tablets are the future. That's great. They can make an OS for tablet computers and call it Windows 8, it'll be a great fit.

However, I'm not using a tablet and Windows 8 is out of place here. All the optimizations are for tablets and this isn't a tablet.

And as far as learning to do something new, I did. I learned how to use Windows 8 and I learned that it isn't as good a fit on a desktop system as Windows 7. I learned it'll work great on tablets and phones, but not as great as iOS is on phones and tablets which is why Apple commands about 75% of the profit in those markets.


RE: Where was Dell...
By ArcsinZ on 8/22/2012 7:31:11 PM , Rating: 1
You guys are all focusing on the wrong thing. It's not that they "took it out". The original Developer Preview was actually Windows 7 with the Windows 8 UI added in on top. When they went to the Consumer Preview they completely rewrote Explorer and that's why it's not there anymore. To put it back in would not be trivial. They would have to import a bunch of legacy code to make it work. Something they don't want to do.

MS is trying to move to a new era of Windows, but legacy has been holding them back. They didn't realize how big of a deal it was until they released Vista and people complained of "compatibility" issues. If you are Apple, it's easy. Buy a new computer if you want to stay with us. If you don't, go back to Windows. Microsoft can't do that. They have to find a way to support legacy AND the future with one product. Not an easy task, and something no one else has been able to do.


RE: Where was Dell...
By augiem on 8/23/2012 2:23:58 AM , Rating: 4
Legacy is the whole reason Windows is a success. You can still run programs from 30 years ago if you so choose. If they did a total reboot, they'd probably lose 90% of their customers who'd have nothing to lose anymore switching to something else. No, legacy support is VERY important to Microsoft and its what they do. Until Windows 8, high customizability and easing users into changes was also the name of the game. Even up to Vista you could still use the old style start menu. Even after they changed the task bar to icons in 7, they let you go back to the text+icon based one. They've always had some consideration for those who liked doing things the same way in the previous version until Windows 8.

I don't mind so much that they took the start menu out. It's their attitude about it that really bothers me. As soon as a workaround was found to boot directly to the desktop by setting up a scheduled task on startup, they swooped in and blocked it. How does it harm them that a relatively few power users want to jump right to work? That attitude foretells the beginning of a new and more closed-box world for Microsoft users. Kind of reminds me of Luke, Han, Leia, and Chewy in the trash compactor on the death star. The walls are closing in.


RE: Where was Dell...
By wallijonn on 8/23/12, Rating: -1
RE: Where was Dell...
By JediJeb on 8/23/2012 2:48:16 PM , Rating: 2
Maybe that is why I haven't bought much new in the computing arena lately, what I have works and I don't need to spend money I don't have just because MS wants to make more money off me. I only upgraded from W2K to XP a few years ago because a HD crashed and I could no longer find my 2K disk lol.


RE: Where was Dell...
By JediJeb on 8/22/2012 5:45:21 PM , Rating: 2
quote:
Don't know know people want revolutionary new operating systems, but don't want to learn anything new. So they want something new, but it needs to be exactly how it was before. Then MS will be able to please everyone.


I can see why corporates settings would feel this way since a change, especially one like going from W7 to W8 will be, causes them to have to not just upgrade the machines, but have training sessions for the entire staff. If you bring in an outside training person to train hundreds of staff, that is never cheap. I am not sure how much we spent just to train about 40 people when switching to the newest Office, and believe me most of the ones that sat through the class still didn't know what to do. Many never learn what software does or how it works they simply remember " click here and here and here and you are done" and repeat that every time they do something.


RE: Where was Dell...
By Chernobyl68 on 8/22/2012 6:55:02 PM , Rating: 2
Hundreds? Try tens of thousands at my job. We're still using Win XP.


RE: Where was Dell...
By StevoLincolnite on 8/22/2012 9:34:11 PM , Rating: 2
Only have one computer at my job to do very basic accounting, still running Windows 3.11 on it, works great.
If it ain't broke, don't fix it. :)


RE: Where was Dell...
By JediJeb on 8/23/2012 2:49:19 PM , Rating: 2
Got rid of our last W3.11 two years ago, I miss it so much. :(


RE: Where was Dell...
By Reclaimer77 on 8/23/2012 2:13:25 AM , Rating: 2
How is putting the same exact mobile interface on the desktop "revolutionary" or even new? It's shitty is what it is. Metro is SHIT for a desktop PC, get over it.

I like Android but I'll be damned if I want the Android UI to be on my desktop! Same with Metro, or whatever the hell it's being called now.


RE: Where was Dell...
By BifurcatedBoat on 8/23/2012 2:31:46 PM , Rating: 2
If it were revolutionary in the sense that, "boy, this sure makes using a desktop PC a lot better", then I'd be fully on board with it. Instead it's, "boy, you can really tell this OS was built for tablets and phones, not PCs."

The "Metro future" is all fullscreen apps. In an operating system called Windows. "Oh, it's called Windows because there was a time when you used to be able to have more than one thing on your screen at a time."


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