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Dell: The Erstwhile PC King Aims for the Middle Dell was once the leader in the PC making

market. Until 5 years ago when Hewlett Packard took over as number one. But now HP has announced they are going to divest 41 billion from the PC business. Dells founder and CEO Michael Dell went to the internet and posted messages on twitter saying Goodbye HP and Sorry you dont want to be in PCs anymore, we like the PC business, and were staying in it. Dell has diversified its operations into IT services, computer networking, and data storage through a string of 10 acquisitions in less than two years. Michael Dell believes that the low cost low margin hardware will be a catalyst to higher-margin products. Dell will direct their focus to the small to medium sized businesses and government agencies. This is all happening at a time when Dell is expected to make less profit this year. 3.7 billion less than it did in 2005. The company shares have lost 40 percent since Jan. 2007. In a move much like Steve Jobs with Apple, Michael Dell left and returned and ousted former CEO Kevin Rollins. Dell made attempts to stay on top of their game with Adamo which was their $2,000 high design laptop but that failed to find a grip and last month the company killed off its 5-inch tablet called the Streak. Dell believes that by focusing on cost conscious IT officers being placed in organizations with 100 to 5,000 employees they will be able to stay out of the cross hairs of its rivals and avoid the expense and risk of keeping up with consumer whims. No matter how hard Dell tries to set themselves up with a competitive advantage through acquisitions they still seem to be behind the technological demands such as data analysis software and cloud computing. HP bought Autonomy for 10.3 Billion on Aug.18. Server sales are being replaced with cloud computing services such as Amazon and Microsoft. Dell has a lot of work ahead of them in order for them to shed their current reputation of being the cheap box builder. It will take time. At the age of 46 Michael Dell says he isnt concerned about the wait, I think 46 is still pretty young. I do not know much about Dell but from what I remember Dell set them up with a best cost provider strategy. You could not walk into just any store and buy a Dell computer. But the consumer could go online and order a computer that had just what that person wanted, for a very reasonable price. Maybe not the lowest price out there but for a low competitive price. Michael Dells comments on twitter saying goodbye to HP and sorry youre not interested in PCs anymore reminded me of the postings made by John Mackey. It may not be unethical to write blogs but it does give the company a bad persona when the CEO cannot act professional. I would think one reason HPs decision to diversify is to set them up with a competitive advantage over those companies that chose not to. It may be too hard for Dell to switch to high end hardware now that they have set themselves up as a low cost provider. That would be like Wal-mart doing away with all their products and selling strictly

organic. I just do not see that happening. Dell may be better off trying to set up a strategic alliance with a company already known for high end hardware such as Alien ware or maybe even a service company like ADP. Where they could utilize existing management/customer relationships to open the doors for IT services. It would seem since the profits have dropped to 3.7 billion below 2005 earnings that they may want to not spread themselves too thin on capital with all the acquisitions they have been making. The R&D at Dell may not be able to handle the speed in the ever changing computer market the same way Apple and Microsoft has with operating systems. Basically the R&D for Dell had to create smaller, thinner designs for laptops desktops. In order for Dell to remain competitive in the information technology market they must extend the companys business into new product categories. Lastly, I totally disagree with the statement made by Michael Dell when he said he is only 46 and has time to wait on the companys reputation to change. Especially in this type of business there is no time to wait by the time there reputation has changed so will the market.