Ringing the changes as Dell diversifies

The PC maker has been working at adding new strings to its bow through product development and acquisitions, which have seen it branch out into software, storage and networking equipment, writes CIARA O'BRIEN

A FEW YEARS ago, Dell was the biggest name in the consumer electronics industry. Synonymous with the PC market, the emphasis was clearly on hardware.

It’s still the fourth largest PC maker, but these days Dell is more interested in providing what Dell's EMEA president Aongus Hegarty describes as an “end-to-end” solution to its customers.

PCs and laptops are still part of that, making up about half of the company’s revenue at the last count, but it’s not the sole focus.

Dell has been working at adding new strings to its bow through a combination of product development and various acquisitions, which have seen it branch out into software, storage and networking equipment.

In the past couple of years, it has bought Quest Software, networking vendor Force10, thin client firm Wyse, and network security firm SonicWall, among others.

“Dell is going through a transformation over the last couple of years,” Hegarty says. “We’ve really transformed the company over that period, and accelerated that in the last two years.”

Hegarty has worked with Dell for some time – 12 years – and in a variety of roles, so he has been well placed to witness the company’s transformation first hand.

At the beginning of the year, he took over responsibility for the EMEA region, including some of Dell’s emerging markets.

It’s an interesting time to be in the industry, with changing consumer needs and the economic crisis causing companies to tighten their belts.

“Our industry is so dynamic and changing, and there is such a wide variety of customers and experiences,” says Hegarty.

“There are different challenges in different markets. The public sector is a market that from a spend and government perspective has been under a lot of pressure across many countries over the last couple of years.

“Yet technology can enable so much from an efficiency and productivity point of view, which is right at the forefront of what we’re looking for.”

It is that potential to lower costs that Dell is currently focusing on when promoting its services, offering more efficient solutions to customers.

Dell’s move isn’t unique; concentrating on the enterprise side of things is a path that IBM and HP have gone before it. IBM has moved to a pure enterprise focus, divesting itself of its hardware business and selling

its PC unit to Chinese firm Lenovo. HP had considered a similar move but ultimately decided to keep its personal systems group.

Dell says it isn’t planning to dispose of its consumer device unit – that’s not even a consideration at present.

“PCs and that technology is still important. It’s not that we’ve stepped away from the PC, it’s really that we have really broadened out our capabilities,” says Hegarty.

“Customers I speak to are looking for a company that wants to understand their business, what their burning business needs and requirements are, and have the capability to deploy technology solutions to meet those needs. We would see ourselves as an end-to-end technology company.

The revenue earned from these new businesses hasn’t quite replaced the lost sales from laptops yet, but Dell is persevering with its chosen path for now.

Last quarter, its overall enterprise grew by 6 per globally, with its global server business launching by 14 per cent, and a similar growth rate in Europe. Hegarty says that these results show good progress from a transformation perspective.

While the desktop industry is seen as something of a dying sector, Dell says that isn’t the case.

“There will be a billion PC devices sold and in use at the end of this year. In my opinion, it’s a long way from being dead. About 30 to 35 per cent of the market still buys desktops,” Hegarty says.

“Notebook and mobility is growing fast and has been for some time. There is convergence occurring.

But Dell is not holding on to the hopes of a sudden revival in the PC market’s fortunes, recognising the trend for more mobile devices. The tablet market has been one of the most vibrant and talked about in recent years as devices such as the iPad and Android tablets have gained more prominence.

Dell is hoping to take advantage of that convergence, with a number of new Windows 8 products unveiled at this year’s IFA show in Germany. One was a hybrid laptop/tablet device that Dell is hoping will appeal to those who need the best of both worlds. A second device, the XPS 10, features a detachable screen that functions as a standalone tablet.

The Windows 8 devices are set to help Dell tap into the trend for the consumerisation of IT – the desire for consumers to bring their own devices to the workplace, and demanding similar devices in the workplace as what they have been using at home, but with more commercial features. Managing those devices and the data they access is also becoming an issue, one that Dell is willing to take on as part of its “end-to-end” offering.

Whatever way it manages to ride out the current global slowdown, Dell’s continued success is important to the Irish economy. Although the company closed down its manufacturing in Limerick, the company employs 2,300 people in Ireland – 1,000 in Limerick and 1,300 at its Cherrywood campus in Dublin.

And Dell is resolutely focused on the future. It recently invested in its cloud service centre here, and has support staff, online services and global supply chain teams located in Ireland.

“We’ve transformed the work we do here. That can never stop,” Hegarty says. “You have to continue to look at where is the business moving to.”

This article was corrected to change an inaccuracy.