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    Dell Executives Stress Company’s Commitment to PCs

    Written by

    Jeff Burt
    Published October 22, 2015
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      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.

      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.

      Dell Executives Stress Company’s Commitment to PCs

      Overseas markets also represent a growth area, Clarke and others said. In the United States, more than 90 percent of homes have PCs in them. However, PC penetration in homes in China—Lenovo’s home base—is 35 percent, and in India it’s 10 percent. Dell has opened more than 12,000 stores in China in hopes of pushing its PCs into more homes.

      Still, questions about Dell’s commitment to PCs persist. Just after Dell announced the EMC bid on Oct. 12, reports surfaced that Dell and private equity firm Silver Lake Partners—which helped finance Michael Dell’s $25 billion deal to take Dell private in 2013—sought to sell the PC business before deciding on the EMC deal.

      HP’s decision to split the company in two—with one, Hewlett-Packard Enterprise, selling enterprise IT solutions and services, and the other, HP Inc., focusing on PCs and printers—also fueled speculation about whether Dell might make a similar move. The breakup becomes official Nov. 1. However, Clarke noted that the paths forward that Dell and HP are taking have continued to diverge over the past several years, something that Michael Dell reiterated in his press conference.

      “We have a different viewpoint as to how our companies should evolve than HP does,” the CEO said.

      Clarke pointed to PC-related announcements Dell made during the Dell World show as proof points to the company’s continued efforts in the market. The company essentially refreshed its OptiPlex commercial PC lineup while also introducing the Wyse 5050 all-in-one zero client for VMware and new cloud multi-function printers.

      With the new OptiPlex systems, Dell officials stressed such features as the new Intel 6th-generation Core processors, increases in memory and storage capacity, improved power consumption and high levels of security. They also talked about their roles in an increasingly mobile business world, including new collaboration and conferencing capabilities that leverage Intel’s Unite secure collaboration technology.

      Jeff Burt
      Jeff Burt
      Jeffrey Burt has been with eWEEK since 2000, covering an array of areas that includes servers, networking, PCs, processors, converged infrastructure, unified communications and the Internet of things.

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