Dell, Needing an iPad Alternative, Waits on Windows 8 for Tablets

NEWS ANALYSIS: Dell's latest earnings highlighted the company's need for its own tablet to answer the iPad. While Dell has a "full complement" of devices planned, the company, like many other PC vendors, is waiting on Microsoft to launch Windows 8 later this year.

Dell's first-quarter earnings "fell short" of expectations, CFO Brian T. Gladden admitted during the company's May 22 earnings call. Revenue for the quarter was down 4 percent from a year ago, while profits declined by 33 percent. While enterprise solutions and services, Dell's new focus, are doing well€”accounting for 31 percent of revenue€”what Dell needs is a tablet. Pronto.

"We're seeing more consumer IT spending diverted to alternative mobile computing devices," Gladden said during the call, indirectly referencing the Apple iPad, if not tablets in general. (Apple was behind 11.8 million of the 17.4 million tablets that shipped during the first quarter, according to IDC.)

When asked, during the question-and-answer portion of the call, about the "pressures" Dell faces in regard to tablets and its plans, CEO Michael Dell answered, shortly, "We're totally lined up with Windows 8. You'll see us introduce tablets [coinciding] with the Windows 8 launch."

Michael Dell confirmed timing was still on track€”Microsoft's track.

When asked how Dell expects the mix between Ultrabooks and tablets to "unfold," as well as the impacts of Windows 8 and touch-screen devices on margins, Dell expanded a little more, saying:

"I don't think we have all the answers to those questions. But what I can tell you is that we think that the touch-screen products will certainly cost more. They're more in the price points and price bands that we tend to operate in. We will have a full complement of products around the time of Windows 8 being announced and available.... Unlike other Windows transitions, this is a transition where you generally are going to need a new PC, whether it's a tablet or an Ultrabook with touch or a notebook with touch or a PC with touch or some derivative hybrid of all of the above type of products, the product refresh cycle associated with this release of Windows is likely to be very different from other releases. But it's hard to know exactly what that looks like. We're preparing a full complement of products, and we'll be ready with those, as we said earlier, at the time of the Windows 8 release."

While Microsoft has been coy about its planned release date for Windows 8, a popular bet€”in keeping with its past product refreshes€”is October, which would nicely set up Dell and others for holiday sales.

Steve Felice, Dell's chief commercial officer, told Reuters in March that Dell had a road map for its tablets that it hadn't yet announced, and that despite Apple's dominance in the space, "We don't think this market is closed off in any way,€ said Felice.

The iPad has certainly reached beyond the consumer realm into business spaces, but Dell is banking on business users who are comfortable with Windows making Windows 8 tablets a hit. Microsoft has been promoting Windows 8 as a "no compromise" solution€”a mantra Dell has been happy to parrot.

"Having a secure Windows tablet that works with all the Windows applications€”we€™re hearing a lot of demand for that, and we think that will be quite attractive,€ Dell told Bloomberg West earlier this year.