If any company should fight the false perception that the PC is dying, it's Dell - and that's exactly what the company is doing at its annual analyst conference this week.
Dell's problem, as it were, is that going private took away the quarterly podium, driven by public reporting of financial results, to make key points. Until this week, the message that Dell PC shipments have been growing for the last five quarters was simply lost.
Over dinner this week with Jeffrey Clarke, Dell's vice chairman of operations and president of client solutions, I learned that Dell not only disputes the decline of PCs but intends to double down on its investment. Like many analysts, Dell sees the tablets-will-replace-PCs argument as BS that isn't backed up by how people actually use the devices.
Numbers Don't Lie - PCs Aren't Dead
We last saw this kind of silliness in the 1980s when everyone, including IBM, seemed to agree that mainframes were dead. Some firms even burned mainframes in their parking lots - which seem rather foolish in retrospect when they discovered that newer client/server platforms didn't perform as well. Decades later, Sun Microsystems, the biggest proponent and beneficiary of the client/server revolution is gone, while IBM's most profitable system is System Z - its mainframe.
[ Commentary: The Mainframe Isn't Dead, and Neither Is the PC ]
Dell is to PCs today as IBM was to mainframes yesterday. Dell is aggressively trying to avoid the mistake that IBM made, in part by pushing back on this foolhardy idea. Clarke reports that, over the last year, Dell has tripled its shelf space while growing direct sales as well. China growth and penetration is significant, at 40 percent, and Japan mirrors this rate. Plus, 70 percent of new Dell customers are first-time PC buyers. All told, Dell reporting growth across the company, with its highest market shares in 22 quarters and growth topping its top five commercial PC competitors.
It's interesting to note that Dell's thin client growth runs at 30 percent, year over year, which means PC growth is strong enough to overcome thin client cannibalization. And all this is happening while tablet growth flattens. Tablets clearly aren't dying, but they aren't replacing PCs anymore, either. (Dell reports triple-digit tablet growth this quarter, albeit from a small base number.)
Dell's Little Touches Driving PC Growth
IBM discovered that the mainframe had to evolve rapidly. Dell is realizing this with PCs - and it helps explain why they show such massive growth. Dell has simplified interactions and implemented standard configurations, both of which improve the buying process. The company boosted monitor performance while driving down their price, making monitor upgrades more attractive and, with high-resolution screens reducing the need for a multiple-monitor workstation.
In addition, Dell focused on design, bringing to market some of the most attractive products the company has ever fielded. I'm writing this on a new Dell Latitude laptop. It's an impressive product.
The company continues to provide XP migration services, too, having migrated around 8,000 customers from that obsolete platform to date. In the midst of this, Dell customer satisfaction scores are at all-time highs - largely because the company is fighting the perception that PCs are dead and investing to ensure it provides the best PCs in the market.
This will continue. In next few months, Dell plans to announce an all-in-one thin client, a commercial chrome laptop and a commercial 2-in-1 (a 13-inch Windows tablet with removable keyboard), followed by a similar consumer product, a micro-desktop and a few things I'm not allowed to mention yet.
50 Million Elvis Fans Can Be Wrong
Nearly 500 million PCs are more than four-years-old. That's a massive opportunity for PC replacement. Dell is competing to replace most of it - not only fighting the belief that PCs are dead (supporting this with its growth numbers) but hedging its bets with Dell Chromebook 11 (targeted to education) and other thin clients to assure that Dell benefits no matter which way the market jumps.
There's a lesson here: Just because everyone says something is true doesn't mean it is. It takes a lot to displace a dominant technology; tablets, so far, have bounced. Yes, overall PC shipments have declined, and Dell alone can't flip this trend, no matter how much it grows. However, the mainframe market fell around IBM, leaving it as the only vendor and at a level of dominance it never had even at its mainframe peak. If this happens in the PC market, Dell plans to be the last one standing.
There's another lesson here: Perceptions can become reality even if they're wrong. Dell is trying to prove wrong the perception that the PC is dead, and clearly benefiting from its position, but this perception must change for Dell to reap the benefits. That's why Dell works so hard to showcase that reality differs greatly from perception.
It helps that Dell is now private, too - financial analysts like conformity, and Dell refuses to conform to a stupid (though clearly prevalent) perception.
Rob Enderle is president and principal analyst of the Enderle Group. Previously, he was the Senior Research Fellow for Forrester Research and the Giga Information Group. Prior to that he worked for IBM and held positions in Internal Audit, Competitive Analysis, Marketing, Finance and Security. Currently, Enderle writes on emerging technology, security and Linux for a variety of publications and appears on national news TV shows that include CNBC, FOX, Bloomberg and NPR.
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