Michael Dell: Notebooks 'screwed up' but can still compete with tablets

Notebooks might have missed the mark and tablet popularity is on the rise, but that doesn't mean the PC is dead - at least not according to Dell chairman and CEO, Michael Dell.

Speaking with Toni Sacconaghi, an IT hardware analyst for Sanford C. Bernstein & Co. Inc., Dell discussed a number of different issues relevant to his company and the computer industry at large.

However, it was their debate over the current theory that we are in a "post-PC world" that seemed to strike a chord. Based on the constant bouncing back during the conversation, it's difficult to decipher an actual answer out of these two. Nevertheless, Dell's takeaway points are:

• Notebooks screwed up and could have done a better job
• Tablets fill a void that laptops missed
• Tablets are a viable form factor, but they don't replace PCs entirely
• PCs are still necessary and critical products at work and at home

It's almost impossible to convey the tension (and even hilarity) of this debate without reading how it went down, so here's an excerpt:

Sacconaghi: Maybe we can talk about PCs a little bit. Is -- are we in a post-PC era, and are we seeing the beginning of the death of the PC?

Dell: Here's a way to think about it. When you got your smart phone, did you get rid of your PC?

Sacconaghi: No.

Dell: Most -- (inaudible) no, you didn't get rid of your PC. Okay. When you got your tablet, did you get rid of your PC?

Sacconaghi: I have not, but if I look around the room and I see the number of tablets that are here, maybe these people haven't thrown them out (multiple speakers)

Dell: Well, let's ask them. Okay, you have a tablet. How many of you have a tablet and got rid of your PC? So we've got one, two, three, four, five, six?

Sacconaghi: I ask it in a different way?

Dell: Sure.

Sacconaghi: How many of you have a tablet and will wait longer to replace your existing PC? Right? So if I think about that and my average replacement cycle on a (multiple speakers)

Dell: I've got another question. How many of your employers will buy you a smart phone, a tablet, and a PC? Okay. Those of you who have your hands up, how many of you work in organizations with more than 500 people? One, two, three, 3.5 maybe?

So this -- so I was at a bank earlier today, the biggest or one of the biggest, and meeting with the CIO and a bunch of the folks there. They're not going to buy three devices for every person.

You look at the tablet, you say, well, what is a tablet? What job does the tablet do that the Notebook didn't do? There are a lot of things there. One thing is that the tablet is much lighter, much better battery life; there's all these sort of things. The Notebook, it just screwed up. Notebook could have done such a better job.

So why did that happen? Well, power management, light weight. You can actually make a better Notebook that gets closer to the tablet. We're still going to do tablets, and tablets are a very viable form factor, but I think there are many ways to kind of learn from this in terms of how does the Notebook get better? Because let's say you had a tablet that also had a keyboard. Keyboards don't weigh very much, so that's pretty interesting.

So I think as ARM shows up on Android and Windows, in small low-power devices, I think you're going to have a pretty exciting environment here. But put it in perspective. We will ask the expert here. How many tablets do you think Apple will sell this year?

Sacconaghi: Between 30 million and 40 million.

Dell: Fine, whatever. So the installed base of PCs is 1.5 billion. Gartner says there will be 2 billion PCs in 2014, so 1.5 billion, 2 billion PCs, 30 million, 40 million tablets. I think it's important for us to put it in perspective, and also when you go into this kind of corporate environment and you say how many corporations are actually going to buy a third device for their employees? You've got a lot of rich people here in the audience who buy their own device, great, fantastic. Last night, we had a bunch of CIOs, some of them from some very expensive universities in the area. You ask the CIO what are kids bringing to school? Parents will buy the kid a smart phone, a Notebook, and a tablet to go to school. They'll buy them a smart phone and a PC. If they want to buy their own tablet, the kid's got to pay for it themselves.

Sacconaghi: I guess I don't want to belabor the point and I'm going to get to these questions in rapid-fire succession, but if you were a consumer PC company, given that we had almost half the room saying that they would push out their replacement cycle in existing PCs, would you feel more threatened or worried about tablets? I realize consumer PCs are a small part of your business today, but is it largely this corporate distinction or do you think this is a skewed demographic given how many people said they were pushing out their PC purchases?

Dell: I'm taking it a bit more pragmatically in terms of there are things that I can do something about and things I can't do something about. So, if somebody wants to delay a Windows 7 refresh because they now have a tablet, I'm not sure I can really do anything about that today. Maybe I can worry about that; I'm not sure that really helps. So I sort of analyze the problem and say what can I actually do about it? I go to ARM, get a processor that doesn't use as much power. I can make a tablet. I can make a better Notebook that competes better with the tablet. I can go to Microsoft and say, hey, why don't you make ARM; Google, why don't you do this, do that? Those are the things we are doing.

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