We will invest in our PC business, Michael Dell tells employees

Michael Dell has told employees that he will "significantly increase" investment in his company's PC business if his plan to take the company private gets the go-ahead. 

In an internal memo disclosed to the SEC, Dell outlined his vision for the company. In it, he reiterated Dell's ongoing strategy to "extend [its] end-to-end information technology solutions capabilities". 

This strategy has already seen Dell buy companies ranging from IT services provider Perot Systems to thin client manufacturer Wyse, and more acquisition will ensue, Dell wrote. "Dell’s strategy of becoming an integrated provider of end-to-end IT solutions is expected to require additional investments in converged infrastructure solutions, software, cloud solutions, application development and modernisation, consulting and managed security services," he said in the memo. 

But he also wrote that he plans to "invest for growth in the PC and tablet business". 

"We have plans to significantly increase investment in our PC and tablet business to enhance our ability to compete," Dell said. "While Dell’s strategy in the PC business has been to maximise gross margins, following the transaction, we expect to focus instead on maximising revenue and cash flow growth with the goal of improving long-term sales and competitive positioning."

This puts paid to the analysis that the purpose of Dell's proposed take-over bid is to allow the company to leave the PC business. 

It echoes assurances from Hewlett-Packard CEO Meg Whitman that, contrary to rumours, the company has no plans to spin off its PC business. "We have no plans to break up the company," she said earlier this year. "I feel quite strongly that we are better and stronger together.

Other components of Dell's strategy include expanding its sales force, simplifying its customer experience and competing "aggressively in emerging countries".

Dell made special reference to China, where he recently visited customers. "China is a nation ripe with opportunity and brimming with optimism," he wrote in the memo. 'It was exhilarating to see the depth of our relationships and the enthusiasm for a technology solutions partner to help advance the national goals of growth, productivity and progress."

Speaking to Information Age earlier this year, for a feature on the future of the PC business, Gartner analyst Ranjit Atwal remarked that Dell should use the opportunity of private ownership to de-emphasise its PC division. “I think if Dell comes back as a PC vendor, they're probably in trouble," he said.

Ovum analyst Roy Illsley, though, said that Dell's PCs could be the anchor for its end-to-end services strategy. He pointed to a recent deal with Swiss rail operator SBB, in which Dell provided mobile device management services as well as a fleet of laptops.

"That's the sort of value-add Dell needs to offer to win big contracts," he said. 

Pete Swabey

Pete Swabey

Pete was Editor of Information Age and head of technology research for Vitesse Media plc from 2005 to 2013, before moving on to be Senior Editor and then Editorial Director at The Economist Intelligence...

Related Topics