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Meet the most profitable PC company you've never heard of

Rob Enderle | April 21, 2014
Dell's Original Equipment Manufacturer division makes custom PCs for companies in a variety of industries. It also makes money. With sales of plain ol' out-of-the-box machines on the decline, this might point to the future of the PC.

If I told you there was a multibillion-dollar PC company that continues to grow at a double-digit rate in this so-called age of the dead PC, you'd think I was nuts. The reason you don't hear about it is because it's buried in Dell and doesn't have much of a marketing budget. This company-within-a-company is also unique, building highly customized PCs to order.

I wonder if it doesn't point the way to the future of the PC.

Dell OEM Division Tackles Custom PC Development

The Dell OEM division has fascinated me since I first heard of it a few years now. Even though it was a fraction of the size it is today, back than it brought in more than $1 billion in revenue and grew faster than what was still a healthy PC market.

Yes, it's a small percentage of the PC market, estimated to be well over $100 billion annually, but Dell OEM fills a unique need in a sub-market saturated by firms that build their own PCs into highly customized hardware before they sell them.

Custom development is expensive - and timely upgrades and patches are even more expensive. The firms doing this development, in industries such as healthcare, networking and manufacturing, build their own PC-like components at volumes are so low that their costs are substantially higher than what Dell charges.

On top of that, their capability to patch and perform updates is woefully inadequate compared to a modern PC company, particularly against current security threats. This becomes a massive problem as firms connect this custom equipment to the network and put it at risk of being attacked - and much of this equipment was never designed to survive the kinds of attacks that prevail in today's market.

Dell OEM is cutting through this market like a hot knife through soft butter because its competing offering is cheaper, designed to be patched and built by a company that designs computers for a living - all of which makes these machines easier to service and upgrade.

Dell Bringing Configure-to-Order Consumer Past to Enterprise Present

Remember, Dell made its name on the configure-to-order concept, giving consumers a standard case and motherboard but letting them choose the mouse, keyboard, memory and hard disk size, GPU and type of processor. If you wanted a faster machine, you got faster memory and a faster processor, maybe a better graphics card and, more recently, an SSD drive. If you wanted a larger hard drive, but you wanted to keep costs down, you bought from the bottom of the barrel.

This is different than opening up the entire design for your choice. It's walking in with a drawing you thought up, along with some specs, and asking a firm to build what you designed. This is what Dell OEM does.

 

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