Dell executives have portrayed the company as an IT outfit that can't be pigeonholed in the PC world anymore. Those statements, however, are largely aspirational today. By the numbers, Dell is very tethered to the trusty PC.
The quote heard around the tech world on Monday came from Dell enterprise chief Brad Anderson. He told PC Pro that "we're no longer a PC company, we're an IT company".
There's a lot of nuance in that statement. Today, Dell is clearly focused on growing its software business, adding value to datacentres, moving more into storage and targeting verticals with services. All of these new focus areas have come via acquisition, but it's clear where Dell is headed. Dell's messaging and focus is on being more than a PC vendor.
I don't doubt that Dell will get away from the PC business. Dell's strategy looks solid.
But then there's reality and those pesky numbers. Anderson's comments came just a few days after Dell reported its fourth quarter results. Those financial results indicate that no matter how you slice Dell's report it's a PC company. The numbers don't lie.
By the numbers:
- In the fourth quarter, Dell's large enterprise revenue was US$4.91 billion. Of that sum, 43 per cent was attributed to client — a word for PCs. That percentage works out to US$2.1 billion.
- Public sector revenue in the fourth quarter was US$3.95 billion and 42 per cent, or US$1.66 billion, of that sum was client.
- SMB revenue was more of the same. Fourth quarter revenue was US$3.98 billion for SMB and 53 per cent of sales, or US$2.11 billion, was related to client.
- The consumer business delivered revenue of US$3.2 billion and 84 per cent of that sum, US$2.68 billion, was related to PCs.
When you look at the consumer business and its 1.2 per cent operating margin it's obvious why Dell wants to move away from PCs. Dell just doesn't make much money on consumer PCs. The PC business could be a death trap.
However, Dell does garner supply chain efficiencies on servers by keeping PCs around. Sound familiar? HP has the same story.
Dell doesn't want to be known as a PC company, but the numbers say something different. Aspiration is one thing. Today's revenue reality is something completely different.