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11/1/2013
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Dell Goes Private: 8 Things To Expect

Dell CEO Michael Dell took the company private to gain more independence from Wall Street investors. Now that the buyout's cleared, what moves can customers expect?

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After eight months of maneuvering, Dell CEO and founder Michael Dell has finally taken the company private. Dell executives remained tightlipped about the buyout as the process wore on, and as the flailing PC market continued to punish the company's margins. But now that Dell has officially delisted, many of its enterprise customers no doubt are asking the question: How will this affect me?

Many have probably been asking the question for months. Activist investors such as Carl Icahn at times appeared to have the upper hand against Michael Dell. It seemed plausible at points that the founder might be ousted from his own company, or that pieces of the company might be sold off.

And even after it became clear Michael Dell would prevail, questions still remained. Observers widely interpreted that Dell didn't want the burden of Wall Street's quarterly scrutiny; after all, it's hard to invest in new enterprise services when shareholders are howling about PC profits every three months. But now that Dell has rid himself of investor pressure, the question still remains: What will he do with his new flexibility, and how will it help customers?

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Dell North America President PH Ferrand spoke with InformationWeek about Dell's strategy as a privately held company. Here are eight takeaways from the conversation.

1. Dell can make investments as a private company that it couldn't make as a public company.

Ferrand affirmed one of the buyout process's dominant narratives: that from Dell's perspective, Wall Street was more trouble than it was worth. Ferrand said going private will give the company more flexibility. It "might not have been obvious to investors" when the company needed to double down on investments, he said.

2. Dell sees no reason to make a smartphone but will continue to make PCs.

"Very few players make money [selling smartphones]," Ferrand said. "We don't feel we have to be in the space."

That's consistent with what Michael Dell told InformationWeek last year at Dell World. But many of the device manufacturers with which Dell competes have started positioning smartphones as a gateway to consumer sales and BYOD business. Microsoft's purchase of Nokia's device business is a notable example. Execs at HP, another company struggling to adjust to the mobile world, have repeatedly indicated that a smartphone is coming.

Why is Dell still resisting the trend? "The IT market is a $3 trillion business and we are about 2% of that," Ferrand said. "We don't need to have phones to get to 3% or 4%."

Even so, Ferrand said Dell remains committed to PCs and intends to become a leader in the commercial tablet space. He said he can't rule out a Dell smartphone eventually but predicted that in the meantime, people will soon stop differentiating between tablets and computers; instead, they'll simply talk broadly about mobile devices. If this revolution in user behavior happens, Dell hopes its Venue 11 Pro tablet will be one of the devices that gets it started; a "three-in-one" device, it attaches to a keyboard to become a laptop and docks to an external monitor to become a desktop replacement.

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DDURBIN1
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DDURBIN1,
User Rank: Ninja
11/4/2013 | 9:06:11 PM
re: Dell Goes Private: 8 Things To Expect
In other words no real change to Dell's strategy. I don't see a direct tie to privatization in most of these as all can and should be undertaken by a public company. Acquisitions do to take longer as public company depending government approval but this usually doesn't cause a disadvantage to being competitive. As for no smartphone, it was a big mistake five years ago and continues to be a big mistake. Where would Samsung be if they took the same strategy as Dell? But then again Dell would probable be in the same ranks as HTC, LG, Blackberry, and Nokia as Dell is barely competing against HP, Acer, Asus and Lenovo in the PC market.
PaulS681
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PaulS681,
User Rank: Ninja
11/5/2013 | 12:00:58 AM
re: Dell Goes Private: 8 Things To Expect
I think Dell is
smart to stay away from the smartphone market. It is saturated as it is. MS
continues to have a tough time with their windows phones and Dell throwing out
a offering at this point will likely no get them far. It would be nice if they
came out with a nice business tablet that ran windows. Similar to the Samsung
Slates.
moarsauce123
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moarsauce123,
User Rank: Ninja
11/5/2013 | 11:24:08 PM
re: Dell Goes Private: 8 Things To Expect
Too bad that "delivering better device quality" is not on the list. That is one of the core issues Dell is not doing so great. They charge too much for the junk they dump off at the front door.
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