Dell reborn as a private corporation – now what?
Where do they go from here, now that they’re free of shareholders?
As of today (30 October 2013) Dell, a multinational corporation that started life as a small company operating out of Michael Dell’s dormitory room at the University of Texas in 1984, is a privately owned entity once more.
In a deal that was valued at nearly US$25 billion, Michael Dell, with the help of investment firm Silver Lake Partners, took the company back into private hands, with shareholders being paid out dividends of $13.88 per share. The company was delisted from Nasdaq on 29 October 2013.
Dell is one of the world’s biggest computer hardware vendors. It has footholds in servers, high-performance computing applications, desktop monitors, consumer and business-orientated laptops and desktops, as well as gaming products through the Alienware brand.
Globally, Dell holds 10.7% of total market share in the consumer PC market, superseded by Lenovo with 14.8% market share and HP with 16%. In terms of unit sales, Dell ships out around 350 million personal computers.
Now that they have gone private, what does that allow them to do in the future? Before the buyout was completed, Dell promised to invest more into mobile products like tablets, convertibles and Ultrabooks, while also paying particular attention to the server market, and also developing their service offerings. Without the burden of shareholders, they have quite a bit of freedom to do more than just that.
Dell can ditch Intel if it underperforms
This is one of the scenarios that could happen should the traditional x86 industry slow down as a result of the impact of Moore’s law on new process technology. As Intel moves to the 14 nanometer process with the potential for delays on their future products, Dell could take the initiative to investigate alternatives to Intel to protect their bottom line.
This could mean that there’s the possibility of adopting technology from AMD or ARM should either of those companies prove to be more successful or have a better product. Dell does not need another Pentium 4 scenario, where in the past Intel struck a deal with it and other companies to exclusively sell Intel products.
Dell can now offer more Linux-based machines
One of the interesting developments of 2012 was two new Dell products – one was a workstation-class notebook and the other was a high-end consumer ultrabook, the XPS 13 Developer Edition, both of which were offered standard with Ubuntu Linux pre-installed.
Should Windows 8 underperform in the long-term, Dell’s in a position to make a snap change to a better platform without consulting shareholders. Dell already has a dedicated Linux support platform for their OEM and business customers and they had a hand in shaping the drivers for their one-off notebooks to make them work right out of the box with no fiddling necessary from the user.
The Linux market could definitely do with a hardware partner and Dell is well positioned to do exactly that.
A bigger push for mobile
Quick, name me three Dell tablets you’re familiar with! Did you get even one? There was the Latitude 10, but it wasn’t as popular as initially hoped. It was one of the few tablets that could join domains out of the box because it shipped with Windows 8 Professional, but it was otherwise slow thanks to the Intel Atom processor.
But Dell does have three new tablets in the works – the Venue 7, Venue 8 and Venue 8 Pro, with the former two on Android 4.3 and priced to compete with the Nexus 7. The Venue 8 Pro even offers Windows 8.1. All are based on brand new Intel Bay Trail hardware.
Along with that, Dell can also move back into mobile phones and offer Windows 8.1 devices in those markets as well. All they need is a few customised services to make it an enticing option for their business and they could see better performance from these new product lines.
I believe that exiting the stock market was a good choice for Dell. They’re a little more nimble and flexible now than their competition and able to go with the flow, instead of yielding to the wishes of stockholders who may not hold the same ideals that Michael Dell had when he decided to drop his college studies for something he believed in.
Second chances come rarely in the computer industry and most are squandered. I personally hope this benefits Dell in the long run.
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