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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 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. :(


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