It's a Dell old business on the desktop

Dell's ambitions to grow beyond its traditional market are both bold and realisable. Yet its trademark efficiency comes at a price

Any way you cut it, Dell's ambition to become an $80bn (£46bn) company is game over for the desktop PC. It is the only company to see double-digit profits in this market, with most of the rest struggling to stay in the game as they bleed to death on the sword of Dell's ultra-sharp logistics. Nobody else can afford to try, and with Dell itself saying that the PC market is effectively saturated — most of its future growth will come from services, entertainment and peripherals — the engine of innovation will idle.

Dell is often criticised for being uninventive, even conservative in its approach, spending little on research and development in proportion to its importance in the market. Indeed, the company is proud to reply that it "leverages the R&D of the entire industry" — let the others fight it out, and when the dust has settled drive in there with an 18-wheeler full of cut-price goods.

That overlooks Dell's core competency, which is an unparalleled ability to manage its supply chain and market the results. It has created and successfully manages an awesomely effective business model, where a PC can be assembled from major components in four minutes and a laptop in twenty. It makes practically nothing from scratch, which is why not just the IT industry but others should be worried.

Dell's moves into flat-screen televisions, printers and ever more powerful servers are sensible, but potentially only the beginning. It could as easily be selling men's suits or mountain bikes; the company's key innovations, and ones it constantly augments, are in the business of business. For now, it is contenting itself with looking at the 96 percent of the global IT spend that goes elsewhere, but its DNA is capable of considerable mutation.

Which is more than can be said for the poor old desktop PC. Bred into a placid milk cow by a ruthless factory farmer, its future is to graze quietly while servers, storage, portable systems and interactive digital media absorb the attentions of the bright and ambitious. Dell's acumen is to be applauded, even if we should spare a moment to mark the passing of the age of excitement that spawned it.

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