Subscribe / Unsubscribe Enewsletters | Login | Register

Pencil Banner

Dell offers glimpse of its post-buyout life

Patrick Thibodeau | Feb. 8, 2013
There is a lot yet to be told about how going private will change Dell, but one thing it won't change is its enterprise strategy.

"We like Dell," said Bottum. "We feel we got a good partnership and feel they are very adaptable -- I'm not afraid to bet on them."

Analysts are telling Dell customers to pay close attention until the company makes its plans clear.

Much of the speculation about the impact of the buyout is over the low-margin PC division, and particularly the consumer part of the Dell's business. While hardware is still Dell's major revenue generator, its path to higher margins is through enterprise software and services.

Crawford Del Prete, an industry analyst for IDC, expects Dell to continue on with its enterprise strategy. "They are probably just going to try to do it faster," he said.

"This announcement is a good thing for enterprise customers," said Del Prete, "because Dell is going to become more focused on the enterprise and creating value in the enterprise." That's because those are more profitable areas, he said.

By going private, Dell won't have to explain itself to Wall Street every quarter and can spend cash as they want, said Frank Gillett, an analyst at Forrester Research. "They can take chances and not be exposed to getting beat up in the financial markets," he said.

But that doesn't mean that Dell will have a smooth ride. Adrian O'Connell, a Gartner analyst, said HP's statement about Dell is a good example of the challenges that Dell is going to face, namely the "fear, uncertainty and doubt that's going to be thrown around for a while."

"The difficultly, certainly for customers, is that there are a lot of unknowns out there," said O'Connell. He expects a degree of caution until Dell "is really able to clearly reaffirm its strategy and articulate what its priorities are moving forward."

The customer strategy will depend on where Dell makes its technology investments, said O'Connell, but enterprise customers should have a "reasonably good degree of confidence."

To HP's point that the cost of buyout will burden Dell, Charles King, an analyst at Pund-IT, discounted the issue. "If you're going to borrow billions of dollars, there couldn't have been a better time to do it than now," he said, referring to low interest rates.

 

Previous Page  1  2 

Sign up for CIO Asia eNewsletters.