Dell Makes Pc As A Springboard For The High-margin Business

5 years ago, Dell was edged out of the world's largest PC maker by its rival Hewlett-Packard. Last month, Hewlett-Packard's decision shocked the world. They consider the spin-off the PC business that worth $ 41 billion. Dell's founder and CEO Michael S. Dell posted his views quickly using Twitter.

Either the first or the second, with the computing industry moving to the Tablet PC and mobile devices, HP now views the era of the PC as a thing of the past. Dell still regards the PC as a springboard for high-margin corporate business.

With the 10 acquisition within less than two years, Dell has entered the IT services, computer networking and data storage and other fields. Dell's revenue of laptops, desktops and related products in the last year reached $ 39 billion. Dell believes this low-cost, low-margin hardware business will give them open access to the road of high-margin enterprise products.

Meanwhile, Dell had to face the reality. Dell abandoned the troubled consumer products line and put the focus to small and medium business enterprises and government agencies, which have occupied more than half of its revenue.

Dell said in an interview: "we have to make this shift. We consciously make business adjustments, replacing revenue business of low interest rates with revenue business of high interest rates."

But Dell's transformation is also under pressure. Dell expects the profit of this fiscal year will be lower than 2006, which year underwent the same the transformation. Analysts on average expected that, by the January of the next year, Dell's profits will reach $ 3.7 billion. Since January 30, 2007, Dell's share price has fallen 41%. And after that, Dell replaced the former CEO Kevin Rollins to regain control of the company.

The cruelty of the market is known to all public companies, but Apple is an exception. Dell two years ago introduced the high-end $ 2,000 Adamo computer through an eye-catching advertising. But nobody cares. Last month, Dell announced to give up 5-inches Tablet PC Streak.

The growth rate of the PC market also fell. It is expected that this year's global PC shipments will grow 3.8 percent to 364 million units, down from the previous growth rate of 9.3%. In large enterprise data centers for sales, IBM, Cisco, Oracle and Hewlett-Packard has taken a dominant position.

The analysts say that many companies need a considerable experienced vendor, but Dell is not. Dell is a low-cost manufacturer. Getting rid of the image of the low-cost manufacturer is the future direction of Dell. It is time to change the company's positioning.