Embattled Dell Looks to Wearable Computers: Report

Dell officials reportedly see wearable tech as a possible growth market at a time when global PC sales continue to slump.

Dell officials reportedly are eyeing the wearable computing market, an increasingly competitive space that is garnering attention from top consumer tech vendors like Google and Apple.

As they continue to contend with shrinking global PC sales and a controversial bid by CEO Michael Dell to take the company private, Dell officials are looking for potential growth markets. According to Sam Burd, vice president and general manager of Dell's Consumer and SMB Product Group, the company sees opportunities in computing devices that can be worn on a person's body, such as on the wrist.

"We're exploring ideas in that space," Burd told The Guardian news site. "There are challenges in cost, and how to make it a really good experience. But the piece that's interesting is that computers are getting smaller. Having a watch on your wrist—that's pretty interesting, pretty appealing."

Wearable technology promises to become a hotly contested part of the market. Google already is having thousands of people test its Google Glass, which enables users to access the Internet via the headset devices. Google officials July 1 announced that they are updating the device's voice command capabilities. Meanwhile, Apple officials are fueling rumors of an Apple smartwatch by filing to trademark the term "iWatch" in Japan. Reports began circulating in February that Apple was working with manufacturing partner Foxconn on a curved glass smartwatch.

A company called Pebble already is marketing a Bluetooth-connected smartwatch, and a range of other vendors—from Nike to Jawbone—are developing and selling their own wearable tech devices.

For a company like Dell—which is looking to get out from under its dependency on a PC market that continues to see sales fall as consumers and businesses users opt for tablets and smartphones instead—wearable technology could prove to be a possible growth market. In his interview with The Guardian, Dell's Burd said the rapidly increasing demand for mobile computing devices will fuel the growth of wearable tech.

"Looking ahead five years, we expect devices and form factors to continue to change," he said. "There will still be a need for 'static' computing on desktops, but there will be a real need for mobile devices. There's a lot of discussion about how that fits into wearable devices like we've seen with Google Glass and watches. We're looking at a world of lots of connected devices."

Other established tech vendors also are seeing the promise. In a recent interview with Reuters, new Intel CEO Brian Krzanich said he is using a Google Glass device, and that wearable computers—for the eyes, ears and wrists—will continue to hit the market. And he wants Intel silicon to power as many of those devices as possible.

"I think you'll start to see stuff with our silicon toward the end of the year and the beginning of next year," Krzanich said. "We're trying to get our silicon into some of them, create some ourselves, understand the usage and create an ecosystem."

The wearable device push comes as Dell continues to get hammered by the slowing PC market. In the first quarter, Dell—the world's third-largest PC vendor, behind Hewlett-Packard and Lenovo—saw overall revenues fall 2 percent and profits drop 51 percent, due in large part to the company's continued reliance on PC sales. PC sales at the company fell 9 percent in the quarter, and Burd told The Guardian that sales of Dell's Windows 8-based tablets have been soft.

Industry analysts don't expect the problems in the PC market to let up any time soon. IDC analysts said in a June 28 report that global PC shipments will continue to fall throughout the rest of the year—including by 11.7 in the current quarter—while Gartner analysts are forecasting shipments in 2013 will drop 10.6 percent.

It's against that backdrop that Michael Dell and private equity firm Silver Lake Partners are looking to buy the company for $24.4 billion and take it private. However, several large shareholders have balked at the deal, which they said vastly undervalues the company, and investor Carl Icahn has filed a competing bid that would keep the company public. A shareholder vote on the Dell-Silver Lake proposal is scheduled for July 18, and it's unclear whether Michael Dell will have the votes needed to approve it.