AUSTIN, Texas—Dell's announcement that it intends to buy storage giant EMC for $67 billion raised a lot of questions about the company's plans for the future, questions that some officials said can't be answered this early in the process of what promises to be a significant integration effort.
However, one message that executives made clear throughout the three days of the Dell World 2015 show here this week: Dell isn't getting out of the PC business. It was something CEO Michael Dell said during his keynote address Oct. 21, and it was reiterated by others during presentations and in interviews.
"We've been clear for the last six-plus years we intend to be an end-to-end provider" of enterprise IT solutions and services, Jeff Clarke, vice chairman of operations and president of Dell's client computing business, told eWEEK. "We believe that to be an end-to-end provider, you need both ends."
It hasn't been easy being in the PC business over the past several years. There has been a steady decline in global shipments of PCs since 2011, with consumers and business users spending more of their money on mobile devices like tablets and smartphones, and a lack of significant innovations in PCs that could draw buyers' attentions. Gartner and IDC analysts noted that in the third quarter, PC shipments declined between 7.7 percent and 10.8 percent year-over-year. Systems OEMs and component makers have been battered over the past years and have aggressively extended their reach into new markets to reduce their reliance on the PC space.
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Dell is no different, seeing an opportunity to grow its capabilities in the data center. Since Michael Dell returned as CEO in 2007, the company has spent more than $15 billion to buy more than 30 companies, building out its capabilities in such areas as storage, networking, software, the Internet of things (IoT), security and the cloud.
That said, the enterprise effort hasn't diminished the importance of PCs in Dell's larger business strategy, Michael Dell, Clarke and others said. PCs often are the first step into a new business customer, giving Dell the ability to then start selling other products to the organization, they said. It also gives Dell the scale it needs as it builds out its enterprise ambitions.
"Scale is important," Michael Dell said during a press conference Oct. 20. "When you look at the industry, companies that have succeeded in the … data center space were attached to large PC businesses, client businesses, and volume actually matters."
Looking down the road, they also note trends that work both in favor of the PC market, in general, and Dell, in particular. The market is consolidating around the top three PC makers, and Dell will be one of those consolidators, Clarke said. Right now, Lenovo, Hewlett-Packard and Dell own about 55 percent of the PC market; by 2020, as smaller vendors fall by the wayside, that market share will increase to about 75 percent, he said.
For consumer and business users, having three PC suppliers—as well as Apple—will mean more innovation, better pricing and more reliable systems, Clarke said. It's also something end users are looking for, Michael Dell said.
"Customers don't want more suppliers; they want fewer suppliers," he said.
Dell—which is the world's number-three PC maker behind Lenovo and HP—holds about 14 percent of a market that annually sells about 280 million systems, so there is a strong upside to a consolidated market.
Company officials also point out that of the billion-plus PCs in use worldwide today, 600 million of them are four years old or older. At the same time, new systems coming on the market armed with Microsoft's new Windows 10 operating system and Intel's latest 14-nanometer Skylake processors offer significant improvements in everything from performance to power efficiency. Newer PCs also are coming in a range of form factors, including convertibles and two-in-one systems, which can be used as traditional PCs or as tablets. Dell is joining with Lenovo, HP, Microsoft and Intel in a six-week ad campaign dubbed "PC Does What" that will highlight the longer battery life, better features and other benefits that come with buying a new system.
"There is an incredible opportunity with the Windows 10 and Skylake refresh," Allison Drew, vice president of global marketing for end-user computing at Dell, told eWEEK.
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