Dell Should Not Be Afraid Of Competition From Apple
Dell should not be afraid of competition from Apple
Apple inroads into Dell’s market share
The gain of market share by the competitor Apple in PCs affected Dell’s performance.Dell is world’s second largest personal computer maker.As the technology leaps forward, the ways and means of household spending is also changing in tune with technology.Today, many people are spending to acquire smartphones and tablets.PCs are slowly giving way to these improvised gadgets, which give convenience to the users.You can carry your smartphone in your pocket to wherever you go.
Government spending slowing down
But you cannot say the same thing with the governments and the public sector enterprises.They cannot replace their PCs with smartphones, howsoever good the technology may be.After all, a quarter of Dell’s customers are public sector enterprises.But even here, Dell is affected because governments are postponing their spending due to economic crisis looming large at European nations and USA.The world in general is affected by the crisis.Only Asian nations like China, India and Japan are a little better.
Google, new competitor to Dell
In PCs also, Apple poses a tough competition to Dell with its Mac computers and iPad tablets.Many private companies are going for them.It is eating into Dell’s market share.It is not that Dell has not forayed into the field of tablets.Its Streak tablets have not found any takers, maybe due to lack of marketing efforts and also maybe due to the fact that it uses an older version of Android in its gadgets.Now that Google has acquired Motorola’s mobile handset business for $12.5 billion, it will pose competition to Dell also.In future, Dell, like other operators like Samsung, LG and Hutch, may not be able to use Android free of cost anymore.
Acquisitions will help Dell
Dell has downsized its projected growth rate this year from 1%- 5% from the previous 5%- 9%.In the second quarter ended July 29th, sales increased by less than one per cent to $15.7 billion.There was demand for its server computers from companies.Consumers are curbing spending, fearing recessionary trends in the economy.But I feel that the economies will not fall into recession, it will only be a very slow growth, very near zero, unless some other adverse features emerge.The shares of Dell are being traded in USA and Germany at below $15.According to the CEO Michael Dell, the company will be concentrating on acquisitions.This is a good strategy when growth suffers.Kamath, CEO of Infosys, is also adopting the very same strategy for growth.When a company acquires one or two vital companies, the growth is catapulted immediately.It takes time to establish a grassroots facility and grow it to top.Dell will do better to watch the activities of Infosys for inspiration.But Infosys is not a good comparison because it is not in the hardware business.But strategies can be compared for profitable emulation.
Dell focusing on mid-size companies
Dell also should concentrate on mid size companies to take its growth forward.But here again, Apple is making inroads with its Mac and iPad tablets fast.If Dell is not careful, its growth may even become negative.Dell has made deals to expand in data storage, networking and software.For example, Dell is buying a $200 million company Force10Networks, which is a networking company.Dell’s networking income in the second quarter rose from $545 million to $800 million.After this acquisition, it will further increase and cross $1 billion mark.After the agreement to resell storage products from EMC Corp ended, Dell’s sales of storage products plummeted by as much as 20% in the quarter.EMC Corp is the biggest producer of storage computers.But this did not prevent revenue from Dell’s own storage technology division grow by 15%.
Dell should switch over from Android
In July, PC sales decreased by 4.2% in USA.But Apple’s sale is growing by 15% as its Mac is supported by iPhone and iPad.Hewlett Packard is the largest seller of PCs.Dell will do well to develop its tablets with latest technology to increase its growth.Dell should discontinue its Android based tablets and instead rely on Microsoft’s Windows 8 operating system to sell its tablets.It should also increase its marketing initiatives aggressively.
Latitude XT3
The latest laptop/tablet hybrid convertible Dell Latitude XT3 has a 13.3 inch touch screen swivel display with Intel’s second generation Core processor, Intel HD 3000 graphics.It runs on Windows 7 Professional.Magnesium alloy construction has made it light at just 2 kg.Bi-directional hinge enables the display to be rotated in either direction.The notebook carries with it USB 3, Ethernet, FireWire, audio in/out, VGA, HDMI, a card reader and express card slot.The keyboard has a backlit option and spill-proof.The price may be around $2000.
Tablet
Dell’s 10.1 inch tablet runs on Android 3.1 and just launched in China.It has a dual core 1 GHz Tegra 2 processor, 1 GB RAM and 16 GB internal storage, which is expandable.The monitor has a resolution of 1280 x 800 pixels for sharper images.It is 13 mm thick and weighs a little over 700 g.It has a SMP rear auto focus camera with LED flash and a 2 MP front camera.The rear camera can record videos in 1080 p resolution.It has a 40 pin docking port and a micro USB port for charging and data transfer.It is priced at $460 in China.Very soon, duplicates of this product will be flooding Chinese markets.
Dell, a cash rich company
Dell’s lucrative services and outsourcing business in Europe and Latin America is creating a transformation in the company.Its $8 billion worth business is threatening established players like IBM and HP.Dell is a cash rich company like Infosys.Infosys has cash kitty worth $4 billion whereas Dell has cash worth $15 billion at the end of the first quarter.Dell can use this enormous cash power for acquisitions and building facilities.For example, it has recently built a storage business with acquisitions.It is a $2 billion business now.In the next three years, it is poised to grow to $4-5 billion.
If Dell and Infosys merge, it will dominate the world
Dell has enormous clout as an established company worldwide.Its operating margin is 6.8%.Its gross margin is 23.4% in Q1.This was the highest recorded since 1992.Its revenues are $61.6 billion (Infosys is a $6 billion company in India).It has employee strength above one lakh.One area Dell is weak is the development of software.It has not tasted any outstanding success in this area and shies away from this business.But I feel that if Dell recruits more Indian software engineers, it could taste success in this area within a few years.Infosys has no presence in hardware, but it is strong in software.Dell is not strong in software, but very strong in hardware.If these two companies merge together, it will dominate the world with its might in both the fields.
Dell’s Indian operations
Dell has a factory in India and employs 500 people – all Indians.Dell makes PCs and Laptops on order and delivers them straight to the customer from its factory.Dell’s annual revenue in India is close to $2 billion.Dell’s factory is located in the Southern State of Tamil Nadu at Sriperumpudur, an hour’s drive from Chennai.Nokia and Hyundai are also having their factories in the same place.Dell started its India operations as a services provider in 1996.It operated up services of call centres for customer support to anywhere in the USA to Africa and rode a crest of services and software boom that tagged India as the back office to the world.It set up its manufacturing facilities in India in 2007 and now employs 25000 people for all services – next only to USA.Dell was India’s first PC exporter.Dell has set up offices in 12 cities in India and wants to scale up its operations in these places plus new areas.Dell’s India revenue has increased by 28%.This shows that Dell will do well to concentrate on emerging markets like India and China in future for maintaining and improving its growth tempo.Dell has appointed Redington India as its national distributor for its commercial products like laptops, desktops, tablets, smartphones and servers.The new arrangement will enable Dell to have a seamless and highly efficient supply chain solution for its growing commercial channel business in India.
Vaswani’s experience will steer Dell to growth
Dell launched ‘Dell Financial Services India’, a leasing and financial programme for small, medium and large commercial enterprises and public organisations for India.The services will be provided by Macquarie Equipment Finance, the leasing arm of the Sydney-based Macquarie group, provider of banking and investment services.Dell has appointed Suresh Vaswani, who was till recently in Wipro’s IT business, as its Executive Vice President to lead its Applications and Business Process Outsourcing organisation.He will be directly reporting to Steve Schuckenbrock, President of Dell Services.Vaswani will aim to leverage people, technology and IT to deliver great services to the customers.His experience in the IT industry with Wipro will come in handy for Dell.Dell is also helping business enterprises by providing business solutions to their problems.If anybody needs any assistance from Dell, he has to SMS TYOP to 56767 and he will get help from Dell.
Dell should not be afraid of Apple
Dell should not be afraid of Apple.It should take the challenge at the scruff of Apple’s neck.Apple is not really feeling great.It is scared of competition.Android smartphones are taking its wit out of it.Apple is relying more on its lawyers and lawsuits against competition from Android operated phones rather than to believe in the strength of its technology.Now that Google is also acquiring patents through acquisition of Motorola’s mobile business, the field is wide open.Apple may be suppressed in the competition.Dell can overtake Apple in its own territory.Today, Android based smartphones are selling more than iPhones of Apple.Android Honeycomb tablets are making fast inroads into Apple’s territory.Also smartphones cannot push PCs out totally.For many operations, the convenience that a PC offers is required.Those who possess smartphones also possess a PC invariably.In other words, smartphones cannot be a substitute for PCs.For example, I write articles in the Net.All my articles including this one have been written on a PC even though I have a smartphone.Can I write a 1500 word article by using a smartphone? Impossible.My fingers, neck, hands and eyes will ache.