Dell's Ailing Business and 10 Ways to Restore Its Flagging Fortunes

 
 
By Don Reisinger  |  Posted 2013-03-25
 
 
 

Dell's Ailing Business and 10 Ways to Restore Its Flagging Fortunes


Dell is in the middle of what might be the most interesting and dangerous periods in its history.

The company has to chose one of three moves. One move, favored by founder Michael Dell will take it private, and two others will see it acquired by outside investment firms and kept public.

It won’t be easy, of course, but Dell is searching desperately for a way to fix its ailing business. Doing nothing is not an option because the company has seen weakening sales and profits.

But what exactly can Dell do to fix its business? It won’t be simple. The company has for the last several years watched its PC market share decline due to the comparative success of HP and Lenovo. Although Michael Dell has done a little to right the ship (the company is generating billions of dollars every year, after all), it’s clear that his efforts still haven’t been enough to fix the company’s many woes.

Luckily for Dell, though, there’s still a chance for it to survive and thrive. Read on to find out how:

1. Think about replacing Michael Dell

The company’s shareholders have viewed Michael Dell as the only person who has successfully run the firm he founded. But perhaps things need to change. Dell has watched his company lose PC market share, miss out on the mobile craze and fall behind in offering cloud-computing services. Maybe Dell needs to go.

2. Consider the other deals

Although Dell’s special committee on its board of directors has argued that Michael Dell’s deal to go private is still best, that might not be true. Competing offers from investment firm Blackstone Group and veteran corporate raider Carl Icahn have both delivered interesting ideas on what they can do to address Dell’s problems while keeping the company public. If Dell wants to survive and thrive, it needs to consider the other deals.

3. Remember the cloud

The cloud is the future of Dell’s business. The corporate world has for the last several years spent billions of dollars on cloud-computing services, but unfortunately for Dell, it’s still behind the times. The company is trying to catch up, and to its credit, it’s acknowledged its shortcomings. But finding the right formula to succeed in the cloud is an absolute necessity.

4. Don’t turn away from mobile entirely

The mobile world has proven to be a conundrum for Dell. But that doesn’t mean that the company needs to stop. Dell needs to find a way to deliver some sort of value-add to mobile companies, either through working on Android distributions, developing applications or designing devices. Mobile needs to play some role in Dell’s business.

Dell's Ailing Business and 10 Ways to Restore Its Flagging Fortunes


5. Dell must win back the confidence of enterprises

Dell has all but lost the enterprise. HP and Lenovo have a stranglehold on that market at the moment and so far, there’s been no budging. Dell, of course, thinks it can change that situation. But so far it hasn’t done enough to actually appeal to current corporate needs. When will that change?

6. What is Lenovo doing right?

Dell needs to take a good, hard look at Lenovo and figure out what that company is doing right in the PC market. Lenovo over the last couple of years has watched its PC star soar. So far, Dell has done nothing to respond to this competition. Part of Lenovo’s success is based on two factors: security and encryption. Dell needs to start taking a few pages from Lenovo’s book.

7. Work more closely in the channel

One of the things HP did to become so successful was work more closely with partners in the channel. Former CEO Mark Hurd, in fact, often went on sales calls to help with the channel sales effort. Michael Dell doesn’t do anything of the sort. And his company is in deep trouble today because of it.

8. Forget about home entertainment

Dell made the odd decision as of late to focus on the home. The company is trying to turn its PCs into home-entertainment devices. It cares too much about sound and audio while it’s tried time and again to become a home-PC companion for entertainment-seekers—enough of that. Dell isn’t going to find a formula for survival in the living room.

9. Dance around the Microsoft-Google issue

Dell needs to diversify its operating system offerings. Right now, Windows 8 is only slowly ramping up, which is hurting the company’s PC sales. At the same time, an increasing number of people are warming to the idea of PC makers integrating Android (and even in some cases, Chrome OS) into mobile computing products in unique ways. Dell obviously can’t ditch Windows, but playing nice with both Google and Microsoft just in case the future holds something rather surprising for the industry might not be a bad idea. Google and Microsoft might just prove to have the final say on what happens—and what doesn’t—in the technology industry in a few short years.

10. Don’t revolutionize the business

When it’s all said and done, the worst thing Dell can do is try to revolutionize its business and dramatically change what it’s all about. Dell still needs to be Dell. And as its financial performance proves, it can still generate billions of dollars in profits by being Dell. Although the company still needs help, Dell must always remember that being Dell-like isn’t all that bad.

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