In a proxy statement submitted to the U.S. Securities and Exchange Commission on March 29, Dell invited stockholders to a special meeting on its Texas campus on an undisclosed date. Discussions include the company's plans to go private, and issues currently facing the PC industry. Among the topics is an admittance to the "uncertain adoption of Windows 8" and a need to move into as build-to-stock business mode.
In the filing, Dell acknowledges "fundamental changes in the PC market" which include a decline in worldwide revenues for desktop and laptop PCs, and lower shipment forecasts for PC products. There is significant and increasing competition, the company said, from efficient, low-cost manufacturers relying on the build-to-stock model, and those that produce innovative, higher-margin PC products.
Dell stated that long-term challenges effecting PC sales include the uncertainty around Windows 8, the lengthening on the replacement cycle of PC products, and the unexpected slowdowns in enterprise Windows 7 upgrades. Even more, the continued increase of consumer interest in tablets and smartphones will likely replace the desktop and notebook, and currently Dell only manufactures tablets in "limited quantities" – it has no smartphone portfolio whatsoever.
In the filing, the company also warned of the significant uncertainties as to whether, or when, the decreasing revenues in the desktop and laptop sectors will end – if at all. There's also the overall difficulty of predicting the market for PCs "as evidenced by the significant revisions in industry forecasts among industry experts and analysts over the past year".
Here are a few more problems Dell is facing: the ongoing downward pricing pressure and trend towards commoditization in the desktop and notebook personal computer market; and a shift in demand from higher-margin premium PC products to lower-margin value products. Dell also acknowledges the increasing usage of alternative, non-Windows operating systems for the PC, and the increasing adoption of "bring your own device" policies by businesses.
Dell helped build the customizable desktop scene that we know and love today, but the company is now facing a different market that's fueled by the launch of the original iPhone and iPad. As stated earlier, the growing use of tablets, high-end smartphones and even ultra-thin notebooks is killing the traditional desktop and notebook market as more computing power is packed into these highly mobile form factors.
Like HP, Microsoft, Google and even Nvidia, Dell will need to diversify, to address the mobile consumer-based "BYOD" market that's slowly being allowed into the company's coveted enterprise market.
