Dell filing reveals poor state of PC industry

Dell has revealed the dire state of the PC industry, poor take-up of Windows and the need for the company to invest in research and development (R&D). The company’s chairman, Michael Dell, is battling to win over the hearts and minds of Dell shareholders, in a bid to reprivatise and reinvent the company. US billionaire investor Carl Icahn and private equity group Blackstone are to fight Michael Dell in a bidding war over the computer company he founded.

The company suffered big losses in its most recent quarter due to poor PC sales. Dell reported an 11% decrease in revenues in the fourth quarter of 2012, compared with the same period last year. Much of this is due to the poor performance of the PC business.

Gartner noted that in 2010, half of device spending was on traditional desktop and notebook PCs, and 25% on smartphones. In contrast, it predicted that by 2017, half of device spending would be on smartphones, and 20% on traditional desktop and notebook PCs.

Dell filed several reports with the SEC at the end of March, including one, of 274 pages, which outlined why the company needs to move away from the commodity PC business. The report highlighted the long-term challenges facing the company, including a general lengthening of the replacement cycle for PC products, uncertain adoption of the Windows 8 operating system and unexpected slowdowns in enterprise Windows 7 upgrades. The filing also stated that PC sales may also be potentially affected by consumer interest in tablets and smartphones, especially given that Dell does not make a smartphone device.

 

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