Dell will now be a private company. The technology hardware giant, which suffered from years of declining computer sales, will no longer need to be accountable to shareholders. This will have major repercussions in the world of computing. Most of them are positive.
Michael Dell worked with Silver Lake Partners, an investment firm, to work out a nearly $25 billion deal to operate as a private company. Dell now has more time to develop more relevant hardware products that is not measured by profit margins or by sales growth by quarter.
As a public company, Dell pressured itself into producing low-cost products that relied on unit sales growth. This hurt the company’s reputation over time. Low-quality parts meant higher failure rates. Customers then relied on Dell’s customer support to resolve issues. The technical support desk was outsourced overseas to India. The company eventually recalled its support desk back to the U.S.
As Apple built its user base through the growth of smartphones and iPods, it was easy for the giant to extend its growth in tablets. iPads now dominate the tablet market, and this market segment is set to overtake PC sales this year.
Better PC products expected
Dell now has an opportunity to make significant investments in R&D, which is badly needed to make PCs relevant again. Tablets are great as consumption devices (i.e. reading or watching videos), but inputting text can be a very frustrating experience. Apple solved this issue somewhat, by adding Siri to provide voice-activated commands and speech-to-text capabilities. In the PC segment, Microsoft designed the Surface tablet with a removable keyboard. Unfortunately, sales for the Surface tablet remain weak. Inventory for the Surface RT, a scaled down version of a fully functional PC, was written down by Microsoft last quarter.
Microsoft is set to release a second version of the Surface Pro 2. A Surface RT 2, powered by an NVIDIA Tegra 4 chip, is also expected.
Dell had a handful of successful devices that simply lost its way. The XPS is a premium computer that is in need of a refresh.
Ultrabooks need a redesign that offers consumer full desktop capabilities, yet are both comparable and competitive with tablets. The challenge will not be easy to meet: Dell needs to strike a balance between price and functionality.
No mobile solutions
Dell has yet to produce a viable tablet product, so increasing R&D in this area will be beneficial. The company currently offers various XPS tablets that range from CDN$399 – $899.
HP, a major competitor to Dell, chose the Android route by offering an inexpensive 7-inch tablet. Unfortunately, the Slate tablet falls short because the hardware specifications are at the low end.
Software in focus
Dell should be expected to increase its focus on enterprise software. Other firms, including HP, recognized the growth in Cloud computing, ERP systems, and business intelligence software. Dell might acquire a start-up or a mid-sized company to accelerate growth in this segment.
Cheap touchscreen laptop options on the horizon
Led by Asus, less expensive touch screen devices are expected to be available by the holiday season. Asus is releasing the T100, a netbook powered by Intel’s Bay Trail CPU and running Windows 8.1. Toshiba is also releasing a US$380 laptop. This puts pressure on Dell to release something similar.
As Dell returns to its roots, let’s all hope the company is up to the challenge of giving a boost to the traditional PC computing market.
Sponsor: IBM Canada Ltd
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