Dell Has No Plans to Re-Enter Phone Business
Dell will not re-enter the phone sector.
Michael Dell has a lot on his plate now that he's won the $24.9 billion battle to take control over the company he established thirty years ago. As the stockholder dust settles, the CEO will now direct the company towards expanding its enterprise footprint through acquisitions, research and development, increasing sales coverage, and adding new partners to its sales channel. Like its competitors, Dell will also target the lucrative emerging markets.
On the consumer front, Dell will continue to invest in tablets and PCs even though the company declared that it's no longer a PC company earlier this year. "We will continue to make large investments in R&D in enterprise solutions and services," said Chief Financial Officer Brian Gladden in a conference call. "What we've seen is that part of the market is growing faster. By no means is that a statement of our lack of commitment to the PC business."
Dell also reaffirmed with reporters on Thursday that despite the global PC market's rapid decline, end-user computing, which he defined as devices including PCs and tablets, is still an important focus for Dell. However, to completely turn around the company, a significant incremental investment will be required. Having two strong private investors will help make that restructuring happen.
But what Dell has no plans for is a new mobile phone. The company attempted to penetrate the iPhone-dominated market with both Android and Windows Phone solutions like the Dell Aero and the Dell Venue Pro. The company even released a 5 inch phablet called the Dell Streak, but that was ahead of its time. Dell's Windows 8 tablet line has been far more successful.
"We're not getting in the mobile phone business," Michael Dell said in an interview with CNBC. "Every time a new mobile company gets born, they need servers and infrastructure and storage. Companies need to protect and secure their data on these mobile devices."
Michael Dell said that despite the current victory, the company has a long journey ahead and many challenges to overcome. However, under a new private company structure, changes can be made without "the scrutiny, quarterly targets and other limitations of operating as a public company." The founder and CEO will hold a 75 percent stake in the company once the deal finalizes in Dell's current quarter, which ends November 1.
Unfortunately, the win may come with some losses. When asked about possible layoffs during Thursday's conference call, Gladden said to expect a "re-alignment" without elaborating any further on the subject.