Dell's Last Hope? Company Turns to Windows 8 Amid Plunging Sales
August 22, 2012 3:00 PM
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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
picked up by "Rich Kids of Instagram", Mr. Dell himself has face equally
struggling firm's financials and sales
I. Dell Faces Tough Questions, Says Windows 8 is the Answer to Everything
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. (
) fell into roughly a tie for third place with Taiwan's Acer, Inc. (
) after fast-growing Lenovo Group, Ltd. (
) booted it from its perennial second-place spot behind Hewlett Packard Comp. (
). 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'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 (
) Windows 8 will bail out his chief's struggling firm. He commented to investors in
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
pushing Windows 8 product
Dell thinks Windows 8 will be sweet salvation. [Image Source: Storage Look]
II. Editorial Blasts Dell as "Done"
In an editorial
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
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
PC sales -- a topic Mr. Manjoo surprisingly overlooks.
Tablets, like the ill-fated Dell Streak, are only part of the problem for Dell. [Image Source: Engadget]
Looking at Gartner, Inc.'s (
and the IDC Group
for Q2, one company that jumps out is ASUSTek Computer, Inc. (
) 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
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.
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Race to the bottom, and it's not Dell's fault
8/22/2012 4:24:21 PM
The Windows consumer market has been in a race to the bottom for as long as I can remember.
When I was in high school back in 2004 I worked at Office Depot in the tech department. We had all different types of laptops of varying prices and sizes but by FAR the best selling laptop of the week was whichever laptop had the cheapest price tag. We would basically sell out of the cheapest laptop, and then the next cheapest one, so on and so forth.
The Windows consumer market just doesn't seem willing to spend money on high end laptops. High end laptops exist but they never sell well and usually end up losing money for the company.
RE: Race to the bottom, and it's not Dell's fault
8/22/2012 4:50:43 PM
This is because most consumers use their PCs for web surfing, email, Solitaire and balancing the checkbook. There's no need for a high end system when that's all most people do with a PC.
Cheaper priced tablets are starting to trickle down into this territory as well since they fit the same basic use case. Tablets used to have a "look at me" factor, like laptops used to, but now they're everywhere.
"We basically took a look at this situation and said, this is bullshit." -- Newegg Chief Legal Officer Lee Cheng's take on patent troll Soverain
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