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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 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
How do you even close them?

ALT F4. Just like old Windows...

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