The Dell Dilemma

I write this as Dell is about to announce their latest quarterly results on May 28^th. Dell’s struggles in the past few years are well documented in blogs (technical and financial) and their own financial results, even after the comeback of Michael Dell the struggle has continued. Here is a sampling:

1. Dell’s current revenues are steeped in PCs & Notebooks. The financial year ending January 31^st, 2009 had 60% of its revenues in Mobility & PCs – Mobility accounting 31% of the revenues.
2. Even though there are some predictions in the market that the business have quit slashing their IT budgets – it is difficult to envision how Dell is going to come out at the top. Year over year revenues are stagnant at $61.1 billion and the profit is down from $2.94 billion to $2.47 billion.
3. Dell still seems to be dabbling with no clear sense of strategy and direction. Dell has done business selling flat panel TVs and handheld devices.
4. And recently has been attempting to introduce a Smart Phone! Doing a Google Search on “Dell Cell Phone” results in the first entry indicating that they have been mulling a cell phone since 2007! But as you search and read on you find out that carriers have more or less rejected the Dell Cell Phone citing it as too dull. Oh and as I write this and run various Google searches I come across a post which says the Dell’s Cell Phone is Dead!
5. Dell also has recently launched the Adamo series to compete with the Macbook Air from Apple. It has been slow on the Netbook market trend as well. And, of course, like many others, Dell is also rumored to be tinkering with Android based Netbook!
6. Dell is going to face an interesting challenge on the server front thanks to Cloud Offerings by the likes of Amazon and Google in addition to the traditional competition from Sun, HP, and IBM. Not to make things easier even Cisco has entered the Server Market recently!
7. Net-net this lack of direction is well summarized here!

So what is Dell to do, IMHO:

As a recent investor in DELL and watching their stock price meander with no direction, I was prompted to write this post.

Dell needs to make radical changes on what and how they build their products. They need to enter product categories that allow them to create a Blue Ocean or Purple Cow. Simply speaking they need to out-compete their competition – introducing just another Smart Phone or a Netbook is probably not going to be a game changer.

The down-turn in the industry is a good time for Dell to re-invent itself.

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