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Dell: we're no longer a PC company

Dell Ultrabook

By Nicole Kobie

Posted on 27 Feb 2012 at 17:30

Dell no longer sees its business as making and selling PCs, focusing instead on enterprise IT.

The claim follows Dell posting full-year results showing growth in enterprise, but a struggle in consumer sales.

Speaking at the launch of new enterprise hardware at an event in Twickenham, West London today, the president of Dell's enterprise solution group Brad Anderson said: "We're no longer a PC company, we're an IT company."

"Dell's changing very quickly," he added. "We are dramatically changing the make-up of our business."

"It's no longer about shiny boxes, it's about IT solutions [that let companies drive efficiencies]," he added.

The move follows Dell's creation earlier this year of a software division, echoing the strategy HP attempted last year, buying British business software firm Autonomy and considering spinning off its PC making business.

That move was catastrophic for HP's then CEO Leo Apotheker, who has since been replaced by Meg Whitman, and its bottom line, with HP's income sliding 44% last quarter.

Dell believes its recent full-year results "validates" the success of the business-focused strategy, with increases in revenue and operating income boosted by record sales on the enterprise side, while consumer sales slid 2%. Enterprise solutions and services now make up 30% of sales and 50% of profits, Dell said.

"We think our strategy is the right one," Anderson said, adding Dell expects to make more acquisitions to extend its enterprise reach.

Aongus Hegarty, general manager for EMEA, said the strategy wasn't new, but the work of two-and-a-half years. "We think the results reflect a winning, successful transformation," he told PC Pro.

While he admitted Dell was moving away from less profitable areas, including peripherals, Hegarty said the company continued to invest in PCs, citing the success of its XPS line and its continued breadth of client devices.

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User comments

Poor old HP...

Looks like Dell will succeed where HP failed - Dell sees which way the wind is blowing, while HP can't see where its own profits come from. I would guess Dell is a far more competitive player in this market than HP too - and certainly more focussed as a company.

You have to feel sorry for the old printer company though, they have a board that really can't see the landscape changing. They rejected Apotheker, only now to see his strategy working for their main competitor.

By SwissMac on 27 Feb 2012

Confucius

It seems Dell's computer business will fall apart as my Dell laptop. Shocking build quality, I will not buy another Dell.

By Tombstone on 27 Feb 2012

@SwissMac

HP have always had a solid business in the software solutions market. The problem they had was failing to see what the hardware side contributed to it.

By JStairmand on 27 Feb 2012

@JStairmand

That's not the general view. Apotheker was brought in to move the company away from the unprofitable hardware side and towards the much more profitable software side.

HP were so stuck in the past with hardware as the basis for their strategy that they gave up the profitability software promised. They've really underfunded their software division since they bought in new companies. Rather than not getting hardware, they really don't get software.

Of course, it is always possible they don't get either in the modern age... and here it looks like Dell at least will avoid Kodak's fate.

By SwissMac on 28 Feb 2012

@SwissMac

HP have sold software solutions and services, alongside hardware, for well over 30 years.

Apotheker was supposed to bring sofrware and services to the fore. Unfortunately, he was the wrong person and the wrong time.

They also went from high end kit to the consumer market. Back when we used HP Vectras at work, they were more expensive than IBM and Compaq kit, now they are known for bargain basement kit, whilst their interesting stuff disappears in the noise.

By big_D on 28 Feb 2012

@SwissMac

I forgot to say, they also used to be forward looking and innovative.

My first touchscreen computer was a 2005 HP-150...

By big_D on 28 Feb 2012

Compound Failure

Compaq brought DEC to try and get into data-centre hardware and failed, so HP bought Compaq to get into volume corporate desktops.
When HP started in printers margins were 30%-40% and the historic HP culture was based on being very high-tech with high margins and thus overall profitability. All the devices that sit on the desktop are now commoditised and have single digit margins. Dell have come to the same conclusion as Apotheker. However HP might be OK because they are now the only credible volume desktop manufacturer left.

By milliganp on 28 Feb 2012

Wish i didnt read this...

"with increases in revenue and operating income boosted by record sales on the enterprise side"
What Dell need to do now is pump this money into improving their customer service because its quite frankly appalling. I do for once agree with Swissmac, HP failed. I would love it if HP were in Dell's position right now. It would help stop dissapointing my customers and getting mugged off by useless Dell employees who cant even get a quote right after 4 attempts. ARRRRRRRRGGGH!

By HolisticLA on 28 Feb 2012

Trying the same thing over and over and expecting different results...

This is a repeat of their prior strategies. And it's the strategy all behemoths use to bring about their extinction.

1. See that a certain tier is only a little profitable.
2. Outsource to ASUS and make more money for a short while.
3. ASUS takes over that market with white boxes.
4. Dell quits that market because margins are slipping.


1. See that a certain tier is only a little profitable.
2. Outsource to ASUS and make more money for a short while.
3. ASUS takes over that market with white boxes.
4. Dell quits that market because margins are slipping.

Rinse and repeat until bankruptcy.

It looks like ASUS is going to be in the business of supply heavy metal soon.

By JDean on 28 Feb 2012

Market opening?

If Dell & HP really aren't interested in making PC's, isn't this an opportunity for one of the smaller companies, such as Chillblast, to hook into the corporate space they seem to want out of? It appears that the home market is withering, but there will be demand from businesses for many years yet. If they can provide decent support, there might be a big market for well built PC's going begging!

By AJPCSolutions on 1 Mar 2012

Still make PCs?

I don't think from this Dell would stop making PCs, the change who they make them for. Enterprise IT has to include the desktop in order to be a complete service and while they can get orders for 1000's a time from the big buyers they will be profitable. No they don't want consumer sales of one or two or even small business of 5 to 10 units a time. Consumer sales particularly are unprofitable because of the level of end user support needed but few business end users ever speak to Dell, that the job of the IT department.

By MIssingLink on 1 Mar 2012

Bean Counter Culture

This is the kind of folly to be expected from corporations who let the Bean Counters rule the roost.

We are starting to see the effects of this economic myalgia in all sectors from Banking, Manufacturing right down to the Murdocks and Sky / The Sun.

There's a missing link in the DNA of all CFO controlled boards which will be increasingly painful as each financial iteration surpasses the last.

It results in the lowest common financial denominator and a complete loss of originality, creative pioneering or genuine development.

I would expect to see more privately owned hothouses take control over the coming decade, as the brilliant minds of the future realise that pleasing share holders and CFO's is not the means to the delivery of balanced manufacturing and knowledge based success.

The Apples, Dells and Microsofts of the future require the leadership of visionary leaders, not the the grinding misery of the CFO or the assest stripping tediuj of Deloitte et al.

If any company who uses Dell's IT services arm asks one simple question, the boastful wheel is easily derailed.

Q. "If Dell are making such high margins out of my business why am I using their services, and how did we negotiate such poor terms?"

By Gindylow on 2 Mar 2012

Bean Counter Culture

This is the kind of folly to be expected from corporations who let the Bean Counters rule the roost.

We are starting to see the effects of this economic myalgia in all sectors from Banking, Manufacturing right down to the Murdocks and Sky / The Sun.

There's a missing link in the DNA of all CFO controlled boards which will be increasingly painful as each financial iteration surpasses the last.

It results in the lowest common financial denominator and a complete loss of originality, creative pioneering or genuine development.

I would expect to see more privately owned hothouses take control over the coming decade, as the brilliant minds of the future realise that pleasing share holders and CFO's is not the means to the delivery of balanced manufacturing and knowledge based success.

The Apples, Dells and Microsofts of the future require the leadership of visionary leaders, not the the grinding misery of the CFO or the assest stripping tediuj of Deloitte et al.

If any company who uses Dell's IT services arm asks one simple question, the boastful wheel is easily derailed.

Q. "If Dell are making such high margins out of my business why am I using their services, and how did we negotiate such poor terms?"

By Gindylow on 2 Mar 2012

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