Dell going Private might mean a PC exit

Taking Dell private is a move Michael Dell had to do if his vision of an IT solutions company is to become a reality.

I remember when I interviewedTerry Mathews of Mitel Networks and how he hated dealing with shareholders. Shareholders are interested in two things: maintaining and enhancing shareholder value.

And, sometimes shareholders get in the way of building and operating a company properly. CEOs are forced to make decisions for the short term that may negatively impact the long term future of the company. By going Private Dell does not have to deal with that and can focus. If successful Dell will enter a new chapter says Carter Lusher, chief IT analyst at market research firm Ovum.

Lusher says this deal makes sense as the company is in the midst of a wrenching transition from a supplier of commodity hardware, mainly traditional PCs, to being a supplier of enterprise-grade IT infrastructure. Dell’s ambition is nothing less than offering the entire IT stack with supporting services. A significant risk likely to face Dell during this transition is that enterprises and public sector organizations cut back on their purchases “until the dust settles.”

“The implication of going private is that Dell is planning radical changes to its strategy and product roadmap. While the company might come out of this transition stronger with a product lineup that better meets the needs of businesses and public sector organizations, there will be uncertainty as to what products and services stay, get strengthen, or get eliminated, Lusher added.

And what might go is the PC business. PC is what made Dell successful in the first place. I certainly understand that PCs are not profit centre anymore but if Dell gets ride of PCs it will be a mistake. Dell is not IBM. IBM did not become successful because of PCs. They had 60 plus years of computing success before it launched the IBM PC in 1981. Dell can’t say that. Dell wants to be more than a PC vendor and they can, but they will need to hold on and improve their PC or device offering. These devices will bring stickiness with the customer because lets face it people don’t stare at servers or storage systems all day. They keep their eyes on personal computing devices. Dell has a great brand in this area of technology.

Now it might not be up to Dell unfortunately. Microsoft is involved and Silver Lake is involved. I don’t think Microsoft now that they have Windows 8 will ask Dell to dump PCs, but I can see Silver Lake asking.

If it does go up for sale look for Samsung to be involved.

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