Dell`s Desktop Dilemma - The Austin layoffs represent 10 percent of the number of jobs Dell will cut (
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"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.
Desktops & Notebooks 
