Is Dell Tying to Fool Itself or Others?

Dell (Nasdaq: DELL  ) recently released a study that opened by announcing, "Technology analysts and journalists alike have been premature in proclaiming the death of the PC." Feeling a little defensive, are we Dell?

Declaring the PC dead would be premature. That said, the growth, excitement, and potentially higher profit margins in the computer hardware business are shifting to tablets. What's more, some of Dell's "findings" seem at odds with its data.

Dell and Intel (Nasdaq: INTC  ) paid Forrester Consulting to survey more than 1,700 North American information workers. According to Dell's report, notebooks and desktops are "must-have" devices while tablets are merely "nice-to-have."

Dell did confess that, "during certain times, in certain locations, or when mobile" nonstandard form factors such as tablets are preferable. What, did they think nobody who bought an Apple (Nasdaq: AAPL  ) iPad, Samsung Galaxy, or Motorola Mobility (NYSE: MMI  ) Xoom already owned a computer?

Dell noted tablets "don't displace existing PCs; rather, they replace paper-based systems ... and introduce new productivity places that previously didn't exist..." It sounds like companies will get a lot more productivity -- which is high on corporate priority lists -- from buying tablets rather than replacing PCs.

Dell also pointed out that tablets introduce new IT challenges. Duh, what new technology doesn't? Despite these challenges, 26% of IT decision-makers expect the number of non-PC devices to grow by more than 25% over the next two years. Only 13% of survey respondents indicated they hadn't "seen/heard any interest" in tablets. More than half indicated interest in tablets at the senior executive, group, departmental, and/or company-wide level. Thus, tablets could offer a PC maker lot more opportunity than battling it out in the slow-growth or no-growth desktop and notebook business.

Foolish takeaway
Dell does its best to use the study to marginalize tablets and promote the usefulness of desktops and notebooks. But the data suggest tablets could be a key driver of revenue and profit growth over the next few years for Dell, Apple, Hewlett-Packard (NYSE: HPQ  ) , Research In Motion (Nasdaq: RIMM  ) and other companies. Too bad Dell hasn't really gotten traction in tablets.

Is Dell fooling itself, offering up more reason to believe the company just doesn't get its customers? Or do you think Dell is trying to fool others, including investors like you and me? To help you stay on top of the tablet war and more, the Motley Fool recently introduced a free My Watchlist feature to help watch your back. You can get up-to-date news and analysis by adding companies to your Watchlist now:

Fool contributor Cindy Johnson does not currently own shares of any stock in this story. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

The Fool owns shares of Apple. The Fool owns shares of and has bought calls on Intel. Motley Fool newsletter services have recommended Apple. Motley Fool newsletter services have recommended Intel. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. Motley Fool newsletter services have recommended creating a diagonal call position in Intel.

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Read/Post Comments (9) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 13, 2011, at 6:50 PM, daveshouston wrote:

    Dell is like Research in Motion, Microsoft, and Nokia.......

    Dead men walking.

  • Report this Comment On May 13, 2011, at 7:07 PM, knflarup wrote:

    It seems to me that Dell and Intel are correct in their conclusions that PC's are not ready for their requiem mass quite yet. While tablets and smart phones are graet social networking devises, they have one major flaw. They can not store a huge amount of data. One needs to store these files the tablet is creating either in the"cloud" with one of the big data storage centers, such as Seagate, western Digital, IBM et al, or they can use their Desktop or notebook pc. At any rate tablets should spur the sales of some of the more powerful desktops or notebooks.

    Kn. Flarup

  • Report this Comment On May 13, 2011, at 7:30 PM, rodriguise wrote:

    Given that PCs represent less than 30% of Dell's income and shrinking, as Dell diversifies itself, and the fact that Dell has several tablet offerings on the horizon your analysis makes little sense and sounds a bit like fomenting.

  • Report this Comment On May 13, 2011, at 10:14 PM, Schnappsy wrote:

    Dell has been reinventing itself over the past 2

    years. It is now heavily into storage, and other

    enterprise areas. If it continues along the lines

    it is going, it will make big money for

    its investors. It is a goldmine.

  • Report this Comment On May 14, 2011, at 1:23 AM, DefunctAcct wrote:

    Geee, if the great visionary Michael Dell himself did not foresee the tablet as useful, why of course it is useless!

    Apple should just close its doors and sell all its assets and give the cash back to investors! LOL.

    On a more serious note, Dell should focus on its migration to Enterprise and wind down its PC business. The PC manufacturing arm has no visions, no strategies and no ideas what to do beyond slapping an OS onto a box and then sell it cheap.

  • Report this Comment On May 14, 2011, at 2:04 AM, gslusher wrote:

    @knflarup

    "They can not store a huge amount of data."

    What's your definition of a "huge amount"? There are tablets that have 64GB of memory. That's more than the PowerBook I'm writing this on.

    Consider this: the 11" MacBook Air can have 128GB of memory. It shouldn't be long before the iPad can have that much or maybe more.

    Add to your list of data storage Apple's own huge data center plus Google.

    Here are some arguments I heard a while back:

    - They're too slow.

    - They don't store enough data.

    - Their screens are too small.

    - Their keyboards are not as good for typing.

    - They are insecure--they can be stolen and compromise data.

    - You can't run "real" programs on them.

    - No one would EVER think of replacing a PC with one.

    Oh, the devices being referred to weren't tablets, but laptops in the early-mid 1990s. (My first Mac was a PowerBook 100: 16 mHz CPU, 6 MB RAM, 40 MB HD, black & white screen, etc. Still, it was a big step up from my Apple //c with 128K RAM.) In those days, "PC" didn't include laptops.

  • Report this Comment On May 14, 2011, at 11:53 AM, skippywonder wrote:

    @gslusher:

    You have it exactly right (as you already know).

    It is obvious to anyone who observes technology trends that this trend is repeated across form factors. Heck, it was even the knock on desktops as compared to mainframes back in the day. Why have a bunch of little underpowered computers when one big one would do the job? But in short order the new form factor becomes much more powerful and compares well to the former generation of larger devices. There is no reason to think tablets won't follow the same story. They will become increasingly powerful and convenient and useful. Anyone who is investing without considering this trend is flying blind.

  • Report this Comment On May 15, 2011, at 10:34 PM, mortflav wrote:

    I've often wondered when buying or selling a stock at what I considered a great opportunity, what sort of fool would be at the other end of my transaction. After reading this article I now understand better why it is not too hard to make money in the stock market. Keep up the "rigorous analysis"!

  • Report this Comment On May 16, 2011, at 4:46 PM, gslusher wrote:

    "Dell and Intel paid Forrester Consulting to survey more than 1,700 North American information workers. According to Dell's report, notebooks and desktops are "must-have" devices while tablets are merely "nice-to-have.""

    They surveyed the wrong people--"information workers." What about other people, like physicians, nurses, salespeople, human resources managers, small business owners, attorneys, teachers, etc, who use and buy computers and tablets? It looks like they determined the outcome by biasing the survey target. Forrester should know better.

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