Michael Dell was done messing around with short-term minded shareholders when he decided to take his company private and things have since been swell. Oh, and by the way, the PC market is alive and well, insists the man behind the "mail-order" PC company.
"It's been great," said Dell, when asked how things had turned out for the hardware maker since it went private in September last year, following a long-drawn battle with its shareholders. The PC business magnate was in Singapore this week and the highlight of the Infocomm Development Authority's Distinguished Infocomm Speaker series held Wednesday.
He explained that the company, 6 to 7 years ago, began evolving its businesses in a significantly different way than when he first founded it in 1984.
"Why mess around with these short-term minded shareholders. We're through with that."
~ Michael Dell, on taking the company private
"We started out as a products company, which is still important to us, but as we worked with customers, it became increasingly clear we needed more than products to succeed," he said. "We needed to know about the specific businesses our customers were in and help them solve their problems."
This required capabilities in data centers, software, security, and services, so the company needed to invest in these areas, he noted. To do so, however, would have been tough for then-public listed Dell.
The company went public in 1988 and during the following 25 years, its stock climbed 13,500 percent and yielded 27 times better returns among the top 500 ICT companies. One of the attributes of public financial markets, however, and especially so in the U.S. market, is that they have a tendency to be "incredibly short-termed focus".
"For an entrepreneur who wants to be bold, take risks, go into new markets, expand, and grow, this isn't a compatible situation. So I decided to buy the company back," Dell told an audience of more than 1,000. He is currently its CEO and chairman.
The company could then do things faster, bigger, and stronger, he said, adding that things were a lot simpler too.
He further explained that the reasons Dell went public in the first place were no longer critical. The company was then growing at an exponential rate and needed capital. It also wanted to gain a better ground with customers looking to work with big public companies.
"We don't have those problems anymore," he said. "We have plenty of capital, our balance sheet is strong, and people know who we are. So why mess around with these short-term minded shareholders. We're through with that."
Another challenge the company faced starting out was being called a "mail-order company"--a label given by its competitors that, Dell said, simply didn't understand what the company was doing. "That was how they were trying to deposition us," he recalled, noting that the description gave Dell a negative stigma from which the company took great pains to break.
PC market so not dead
Asked about the shrinking PC market, he brushed off suggestions the market was heading for a meltdown. "Our PC business is going up!"
He acknowledged, though, that the market is changing and very different than what it was 20 years ago. Today, there are many form factors including tablets, virtual PCs, high-end workstations, and convertibles, but these do not replace the need for PCs, he said.
About 1 million PCs are sold a day, and some 1.5 billion people a day use the PC, according to Dell. As the new devices and form factors emerged, some mistakably believed one would replace another. "That's like saying we have shoes and now that we have bicycles, we don’t need to walk anymore. Or now that we have boats and plane, we don’t need to drive anymore," he said. "There are multiple forms of transportation, just as there are multiple forms of computing, like wearables and cloud computing."
This enormous array of computing forms is creating huge volumes of data as well as opportunities and challenges, for instance, around the need to secure the information.
Dell said his company has evolved beyond its PC days, extending into the enterprise business and services. "And we will continue to grow that, but we think there's an important role for client business and it's a critical part of the entire solution."
He added that some 50,000 of the company's 100,000 employee currently support its IT services business, which include application development, business process outsourcing, and cloud.
Dell in February announced a "very small percentage" of its employees had left in exchange for a severance package as part of a "voluntary separation program". The company added that the move was among other steps toward optimizing its business, streamlining operations, and improving efficiency.