The corporate post-PC era may be arriving and Dell isn't happy about it. The wild card is whether Windows 8 saves the day for Dell.
Dell executives---CEO Michael Dell, CFO Brian Gladden and Chief Commercial Officer Steve Felice---had an elephant in the room as they fielded questions about the company's first quarter earnings. The elephant? Apple's iPad, tablets and smartphones.
Felice set the scene:
We are also seeing some IT spending prioritize to purchase other mobile devices. Now this is mostly a consumer dynamic that there is clearly some impact in areas of commercial as well.
In other words, the commercial PC upgrade cycle is skewing toward other devices.
Meanwhile, Dell is maintaining price discipline and walking away from PC deals that don't make profit sense. As a result, Dell's PC sales are taking a hit.
Gladden was asked whether the PC market is evolving away from the company's strategy. He said.
The growth in the PC market has clearly been lower than what we would have expected a couple of years ago. Clearly some of that is alternative mobile devices that I would argue is a relatively new dynamic affecting the business. There are still opportunities for us to find growth year. We see it as an attractive business.
Felice said there are multiple commercial PC wrinkles, but the business remains healthy.
In talking to the commercial customers, we still don't see in even the midterm any material change in their strategies. Other than maybe virtual desktops.
The big question is whether Windows 8 can save the day. CEO Dell said:
We are totally lined up around the launch of Windows 8. Corporations are still adopting Windows 7 so we don’t think there’s going to be a massive adoption of Windows 8 by corporations early on. Certainly the addition of touch capability into Windows 8 will be welcome.
How welcome? Certainly Windows 8 may save Dell's consumer business a bit. Dell added:
We think that the touch screen products will certainly cost more. They are more in the price points and price bands that we tend to operate in. We will have the full complement of products around the time of Windows 8. Unlike other Windows transitions, you generally are going to need a new PC whether it is a tablet or notebook with touch or some derivative hybrid. The product refresh cycle associated with this release of Windows is likely to be very different from other releases, but it is hard to know exactly what it looks like.