Dell's Desktop Dilemma

By Scott Ferguson  |  Posted 2008-04-01 Print this article Print

title=The Austin layoffs represent 10 percent of the number of jobs Dell will cut}


"Unlike some of the other vendors, [Dell] continued to make desktops [itself]," said Kay. "That was a practice that didn't seem to be working and at the same, desktop volume was drying up and the prices of desktops kept falling... Dell as a company did not get into the notebook market strongly early on."

CEO Michael Dell is trying to change that, and said that the company plans to invest heavily in mobility during the next three years. In the last year, the company has begun offering more features with its laptops, such as solid state drives, and expanding its niche markets that it believes can turn a profit, such as tablets and rugged notebooks.

Dell is offering a new service for desktop OS upgrades and migrations. Click here to read more

Lean Dell and Lean Times

At the same time, the company is looking to cut about $3 billion worth of expenses and it will trim its payroll by nearly 9,000 employees. About 10 percent of those jobs will come from the Austin facility.

Dell is also trying to invest more overseas in order to save costs.

Dell will spend billions to buy parts from Chinese companies and it also is investing heavily in new manufacturing facilities in Poland. All of this comes as the United States-Dell's core market-is facing an uncertain economy.

"Right now, Dell is on a mission to cut expenses at a time when IT spending is under a lot of pressure," said Charles King, an analyst with Pund-IT Research.

Shawn Wu, an analyst with American Technology Research, wrote in an April 1 research note that even with the cuts and a shift toward notebooks, Dell still faces a host of competition from HP, Apple, Lenovo and Acer within the PC space.

"We do not expect competition to get easier, especially in this recessionary macroeconomic environment," Wu wrote.



Submit a Comment

Loading Comments...
Manage your Newsletters: Login   Register My Newsletters

Rocket Fuel