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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Listening to Customers
8/24/2012 3:16:34 AM
It is not that all competitors are equaly sharing the industry decreasing sale rates, because two of them (Lenovo and Asus) are actually increasing their share at Dell's and Acer's participation expense.
At work and professional markets, Lenovo has truly listened to potential customers. A very different story than Dell's (their closest competitor), the company that supposedly has customization of their products, as its prime differential factor... Something that -in practical terms- is lost when their relevant pricing comes out most only thru packaged offers, obviously leaving critical features only to be had at much higherly priced choices. Look at their 2012 mobile product lines. Most Lenovo pro-laptops have the 1600x900 option offered. Dell? struggling to do so in just a couple of top of the line models. And the same goes for backlit keyboards, or ExpressCard availability, a feature that really opens a laptop for varied uses and needs...
I'd risk to say that Dell possibly unknowingly has concentrated itself on big corporate clients and lost a myriad of pro-users. Their marketing geniuses seemed to have constructed a complex choice structure akin to what Intel does (by providing some feats while negating other relevant ones) forgetting that they are far from being a monopoly/duopoly and all this, while the industry is in the midst of long feeble demand times.
Yes, on the short run they had revenue growth to show, but at long term other (Lenovo) is getting a good chunk of the sales as both their profit reports seem to prove.
If in the short run Lenovo realizes that different build materials, shapes and colors DO also factor in the sales equation (like Dell rightly did it), their profits are going to truly skyrocket leaving Dell and other competitors in real problems. Add to this the possibility that HP professional line also catches up.
All this could signal good news for customers by way of better products.
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