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Dell to focus on innovation, new markets
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Dell, the world’s No. 3 personal computer manufacturer, sits at a crossroads after the company was taken private last year.
Founder Michael Dell, describing the company as “the world’s biggest startup,” is setting his sights on strengthening innovation and research, stepping aggressively into new sectors like cloud computing and expanding in emerging markets like China.
Dell has established a US$300 million innovation fund and will cooperate with Google Inc and Microsoft Corp on cloud computing, the company announced during Dell World 2013. The event, held in Austin, Texas recently, was the first of its kind since the company went private.
“Dell has the financial strength, capital structure and scale to lead our industry,” its founder said.
“As a private company, we have the freedom to make the bold moves that are necessary.”
The company’s decision to go private in 2013, ending 25 years of public trading, was widely viewed as a response to the slump in the global PC industry.
Global PC sales are expected to have dropped 10.1 percent in 2013 and will fall 3.8 percent this year, according to International Data Corp, a US-based IT research firm.
Every player in the industry, including Dell, is being forced to adapt to a changing environment.
Apple Inc, with its iPhone and iPad, has been a leader in business transformation and expansion, moving beyond its initial dependence on sales of its Mac computers.
Nowadays the focus is on integrating software and hardware and offering consumers top design products that are smaller and portable.
Lenovo Group Ltd, which last year became the world’s No. 1 PC maker, said at the end of January it will spend US$2.9 billion to acquire the Motorola Mobility smartphone business from Google and will buy IBM’s X86 server businesses for US$2.3 billion.
Lenovo is hoping to challenge market leaders Apple and Samsung Electronics in the market for Internet-connected devices via PCs, smartphones, TVs and the newly added server business.
Dell used to rely on computer sales to big corporate clients. But its new US$300 million Dell Strategic Innovation Venture Fund will invest in early-to-growth-stage companies involved in storage, cloud computing, big data, next-generation data centers, security and mobility.
The recent Dell World event in Texas attracted some industry high-flyers, including Elon Musk, chief executive of Tesla Motors, and Chris Anderson, former Wired magazine editor-in-chief and currently co-founder and CEO of 3DRobotics.
Their presence and comments at the event added an aura of startup and entrepreneurship.
Musk, who is also CEO of Space Exploration Technologies and founder of Paypal, has been attracting a lot of press attention since Tesla’s upmarket electric car made its debut in China last month.
Dell’s cooperation with Google, Microsoft and Dropbox and its own server business are expected to help the company offer users a unified platform and services in a cloud-based, mobile-driven world.
Dell is already the world’s No. 2 server vendor, trailing only Hewlett-Packard.
Even in the PC market, Dell has adapted to a rapidly changing market.
With completion of the leveraged buyout, Dell has redefined its strategic focus “beyond its traditional strength in the professional PC market.” It is now also targeting consumer PCs, particularly in emerging markets, according to Gartner, another US-based researcher.
In China, Dell’s most important overseas market, plans are afoot to increase investment in research and distribution channels. It already ranks No. 2 in China’s PC market and is No. 1 for servers.
More than 80 percent of Internet companies in China, including Baidu, Alibaba and Tencent, use Dell products to run data centers, networking products, storage and servers.
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