Dell’s Rock and Hard Spot
The Apple iPad is booming, but does that mean the PC is dying?
The enterprise seems to to view the iPad not as an OR, but an AND.
But the consumer PC is not so resilient. This week Dell reported Fourth Quarter Results: “Dell Inc.’s (DELL) fiscal fourth-quarter earnings fell 18% as the computer maker saw revenue from the consumer segment continue to fall and operating expenses rise.” A blip? No, go back to November for Dell’s third quarter results: “Dell missed Wall Street’s revenue estimates for its third quarter, as consumer PC revenue dropped 6% from last year.” It is bad news for Dell, the Thai floods were bad enough, and HP not getting out of PCs was probably even worse, but consumer PCs dropping off is bad bad bad. 
The obvious thing to do is change its business model. But this isn’t so easy, Dustin Curtis sums it up well:
After basically admitting defeat in the consumer PC market and promising to focus on enterprise IT and “mobile services” last year, Dell has found itself in the midst of a confusing transition. It is caught between two markets that are dramatically changing. Consumer PCs are dying. Enterprise IT problems are being solved increasingly by “cloud-based” solutions using generic or custom-built equipment. The future viability of Dell’s hardware products, which already have razor-thin margins, does not look great.
Dell gets about 50% of its revenue from PCs and mobile devices. It hopes to replace some of that revenue with a new enterprise software focus, but this is not Dell’s competency, nor a market easy to conquer.
The demise of the consumer PC is a big thing – not just for Dell, but for Microsoft, Intel, and so many others. Personally, I’m not completely convinced the consumer PC is dead – some of them are becoming MACs and some are just lasting a lot longer. Windows 7 was the first OS from Microsoft that had lower or similar minimum hardware specifications as its predecessor (Vista). I know my PC tends to run browser tabs more than anything else, and browsers don’t require as much power as other common applications.
Clearly the browser and the web are becoming the most critical apps. On the software side, this is creating browser wars – Chrome, Mozilla, and IE in the center ring and players like Adobe and WebRTC in the side rings. But if it’s a cloudy future – what does that do to the hardware game – does Dell have a future? I think the PC has a reasonably viable future – PC vs. Mac isn’t that different when it comes to the browser and PCs are much less expensive. Alternatives to the PC though deserve a look: the Google Chromebook makes a lot of sense to me – but I’ve never actually tried one nor has most of the civilized world. I’ve always liked the notion of thin client computers. Now that Mitel and VMware cracked the code for real time contact center solutions with VMware View, perhaps the thin clients from Wyse or HP will gain traction. With a few modifications, the thin client computer could be viable for home users.
Are we really going to trade our keyboards, big screens, and mice for iPads?