Tuesday, June 4, 2013

Dell - Sometimes It's Not Good To Be Trendy

While reading the Businessweek article about Dell (“The Erstwhile PC King Aims For The Middle”), one point jumped out at me when the author questioned Dell's decision to stay in the PC market while its rivals move off into newer fields. He says “whether No. 1 or No. 2, it's a dubious distinction to be one of the biggest suppliers of machines now considered products of a bygone era, as the computing world moves onto tablets and mobile devices. ” While this could be seen as a sign of being out of touch with the current market trends, I actually agree with Michael Dell's decision to keep his company in their area of expertise.
The current market trends show the sales of mobile phones and tablets rapidly taking off, while desktop PCs are on the decline. Many companies have jumped aboard this trend, producing a variety of different tablets and phones to take advantage of this new demand. HP, one of the largest PC suppliers in the world, has even discussed selling off their entire PC division of the company in light of these trends (this decision was later reversed).
Over the course of many years, Dell has built itself up as a reputable supplier of PCs for consumers and businesses. This is clearly their dominant skill set and, tellingly, their past attempts to expand into different fields and demographics have fallen flat.
Despite the recent trends towards simpler and more mobile computing platforms, I think it would be short-sighted for any company as large and well-entrenched as Dell to turn their back on their primary market as HP almost did. Even if the average consumer buys up tablets faster than desktops, there are still many very prominent niches where tablets are insufficient. Most multimedia production requires more processing power than a tablet can offer, and their form factor makes them ill-suited for developing software or writing for an extended period of time. Essentially, tablets are best suited for consuming content, while desktops still reign supreme for actually producing it. If Dell leaves the PC industry in pursuit of the trendy tablet market, they would not only be out of their element against the incumbents (e.g. Apple, Samsung), but they would burn bridges with their primary customers in business, government, and the professional markets.
It is important to analyze everything before you make a strategic decision as important as changing industries (or electing to not change at all). Making a kneejerk reaction towards one field just because it is trendy and new would not be wise, especially if you do not consider the core competency of your organization as a whole. Dell has built itself as a top-notch PC maker, and it would be foolish for it to turn and run towards the tablet market without weighing every other option, especially when there is a whole subset of people and companies who do not want tablets because they can satisfy their needs.
To that end, I disagree with the author of the Businessweek article and applaud Dell for sticking to what it knows best.

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