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2/7/2013
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7 Moves Dell Must Make Now

Dell's decision to go private was a bold step, but the company must continue making aggressive decisions to succeed.

4. Embrace Microsoft Intelligently

Fiering emphasized that Microsoft's participation in the Dell buyout is a "loan, not an investment." Microsoft, in other words, has no seat on the Dell board and no official influence in the company's day-to-day operations. Even so, a deeper relationship could allow the companies to complement one another more effectively while also facilitating the innovation Dell must pursue.

Both companies will have to tread carefully in certain regards; Fiering mentioned that Microsoft's relationship with OEMs has already absorbed some bruising during the Surface "brouhaha," for example. In her note, Cindy Shaw warned that Microsoft's "involvement in the deal [will be] a key influence on the nature and extent of innovation" and cautioned that Dell must maintain an independent vision. Nevertheless, she noted the possibility for personal devices that are more effectively optimized for Windows 8 and for Dell to make strides by hooking into Windows Azure, Microsoft's cloud platform.

Forrester's Johnson likewise noted possibilities in cloud infrastructure, stating, "A lot of good things can happen. I'm bullish."

5. Take Care Of Customers

While Dell will be making aggressive moves behind the scenes, it must make existing customers feel confident that they will be taken care of. In his blog post, Johnson stated that he sees no immediate cause for concern. Fiering similarly stated that Dell "is going to do everything they can to maintain that cash flow. There could be dramatic internal changes but they'll do everything to protect customers."

6. Don't Abandon Devices

Dell's future is in software and services, but that doesn't mean it should dump its struggling PC business. "The PC business is still profitable. It generates a lot of cash," said Fiering, who also remarked that it would be "short-sighted" for Dell to get out. Following item number four in this list, Johnson said Dell can work with Microsoft to offer a better Windows experience. If Dell succeeds on this front, it will do so in spite of past failures to understand consumer preferences. Nevertheless, to make the most out of a closer relationship with Microsoft, and to maintain existing revenue streams as it retools its enterprise services, the company must produce compelling devices. It has demonstrated some foresight lately, such as being the first to make WiGig-ready Ultrabooks, and it will need much more of the same going forward.

7. Remember Its Strengths

Gartner's Simpson pointed out that Dell's Wall Street struggles and image problems have persisted despite the company's strong performance in certain markets, notably severs. "Their server business is one of the healthier bits," he said. Indeed, it's not just that Dell is selling a lot of servers; it's also that the company has remained on the bleeding edge while doing so. Dell already has firm positions in the hyperscale and converged infrastructure business, two areas that should take off in the future. While other aspects of its business work on rebuilding and restructuring, Dell must preserve its strongest revenue streams, which means that rather than resting on its laurels, it must continue to hone these strengths.

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AustinIT
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AustinIT,
User Rank: Apprentice
2/10/2013 | 2:38:06 PM
re: 7 Moves Dell Must Make Now
8) Dell should immediately and aggressively begin courting HP's customer base.
rjennings946
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rjennings946,
User Rank: Apprentice
2/8/2013 | 7:52:42 PM
re: 7 Moves Dell Must Make Now
Re: Don't abandon devices.

The head of Dell's Wyse group received a lot of press from the announcement of "Project Ophelia" at CES 2013. Ophelia is a MiniPC dongle running Android 4.1 with HDMI, USB, Wireless and Bluetooth connectivity and a target retail price of US$50 at a purported 50% gross margin. However, it would take sales of 10 Ophelias to equal the revenue from one tablet or laptop PC; maybe 5 for equal gross profit if the 50% margin could be achieved.

Ophelia appears to be a clone of CozySwan's UG007 device, which differs only in its power source: a wallwart rather than siphoning from the monitor/HDTV set. For a comparison of the two MiniPCs, see http://oakleafblog.blogspot.co....

Microsoft might raise a ruckus about using Android as the OS, but it's doubtful if such a device would have the horsepower to run Windows RT.
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