Dells Dilemmas

 
 
By Scot Petersen  |  Posted 2006-01-02 Email Print this article Print
 
 
 
 
 
 
 

Opinion: Dell remains upbeat despite a declining stock price, but nagging questions remain.

The days of "gotta get a Dell" seem long gone. Since the Dell Dude left the scene a few years ago, things have not been quite as exciting. The company is still growing revenue at a double-digit pace every quarter—enough for most companies—but when its the low double digits rather than the 25 percent growth of years past, people have started to wonder: Is Dell on the downside?

Not so, Dell President and CEO Kevin Rollins told eWEEK editors in this weeks issue. Despite slowing growth, lower profits, service complaints, product recalls and layoffs in the past year, Rollins remains as upbeat and committed to the Dell Way as ever. He also is not worried about the companys declining stock price (down about 25 percent in 2005), figuring that Dell is still doing better than its competitors. "Weve made some stumbles in terms of our relationship with Wall Street," Rollins said in an interview, "but that really shouldnt have a whole lot to do with our customers."

He has a point, but with the direct model as Dells "religion," Rollins said, the nagging questions for 2006 remain: What is the strategy for growth in the ever-important enterprise? And how long can the company rely solely on Intel inside its computers while AMD is expanding its share with Hewlett-Packard and Sun? Throw in stiff competition from Toshiba and Lenovo, which tapped former Dell executive William Amelio as its new CEO in late December, and its clear that Dell will be facing some of its toughest battles this year.

As the new year begins, many of 2005s stories remain in the news: BlackBerry maker RIMs ongoing patent suit with NTP has moved a few steps closer to resolution, reports Senior Editor Carmen Nobel, but a final answer likely wont be coming for several more months. Microsoft, in addition, is still embroiled in the antitrust sanctions handed down by the European Commission, which threatened to fine the company until it complies with the terms of the March 2004 ruling.

As 2004 exited with a flurry of acquisitions in the tech space, so, too, did 2005, headlined by Seagate Technologys purchase of Maxtor for $1.9 billion, announced on Dec. 21. The deal consolidates a large chunk of the disk drive market, but there will be challenges ahead this year in consummating the deal. In another deal that was announced just before the holidays, IBM acquired Micromuse for $865 million. Senior Editor Paula Musich writes that the purchase gives IBM stronger network management offerings for telecommunications carriers and service providers.

eWEEK magazine editor Scot Petersen can be reached at scot_petersen@ziffdavis.com.
 
 
 
 
 
 
 
 
 
 
 

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