Why Michael Dell Can Afford to Be Bolder as a Private Owner

By Chris Preimesberger  |  Posted 2014-05-22 Print this article Print
Michael Dell

"There's nothing wrong with the public markets; they serve a purpose, but when you're private, you can focus much more on lifecycle profits, as opposed to period profits. Private ownership really lends itself to longer-term thinking and planning. I think that in the future companies may be deciding to stay private longer and think harder about going public."

Dell has joined the small group of elite all-purpose IT providers by investing billions in enterprise software, having acquired 40 companies in the last seven years. But it doesn't intend to leave the IT hardware business high and dry any time soon.

Hardware Businesses Moving Right Along

Dell servers, storage, clients and networking divisions are still doing steady business—mostly in the midrange sector—serving as a "foundation that allows us to then bring customers new services, software, data center, cloud, security—all sorts of new capabilities we've built or acquired in the last seven or so years," Dell said.

"We've had five quarters of accelerating growth in our client business. For example, in this last quarter, that business [desktop PCs, laptops, tablets] had its best growth since 2006," Dell said.

Despite all the smartphones that are sold each year [1.3 billion in 2013 worldwide], there is still a strong market for PCs, no matter what trends the market research people are producing.

"When your kid goes off to college, are you going to give him only a cell phone?" Dell asked rhetorically. "I guess it depends upon what school he's going to," Anderson quipped.

Dell told eWEEK that the PC sales are on the rise for his company, which recently received an order for 10,000 laptops from one customer. Dell also said his PC business is posting a much larger margin ["multiple times the profit"] than the slim 1 percent profit margin its biggest competitor, China's Lenovo, shows in financial statements. Now that Dell is private, the CEO chose not to offer specific numbers here.

Dell's Venue 8 tablets, which sell for less than $150, have yet to get substantial traction in the market. Competition from Apple, Samsung and others has been tough to crack, but Dell has said his company will continue to forge ahead in that business.

Where Dell Software Is Headed

Dell told eWEEK that Quest Software, bought by his company for $2.4 billion in July 2012 and now known as Dell Software, is being combined with new acquisition StatSoft to build out its big data analytics offerings. StatSoft was acquired in March to add predictive analytics, the most desired type of business analytics among enterprises.

"The Toad platform [Quest's frontline database tools suite] is very popular with database administrators—a very active community of 3 million and growing," Dell said. "Their freemium model has worked quite well. The team has been evolving this into a business intelligence platform for some time. With some organic investment, some acquisitions, and now with StatSoft Statistica, we now have a predictive analytics platform."

"If you line up Toad and Statistica and what they do, they're highly complementary."

Chris Preimesberger

Chris Preimesberger is Editor of Features & Analysis at eWEEK. Twitter: @editingwhiz


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