Dell shares shed some 17 per cent of their value today as disappointing sales figures drove many to drop the stockJoshua Lott/Reuters
Dell Inc. is going to take another shot at the mobile market.
The first attempt didn't go so well. The Dell Streak, a smartphone-tablet hybrid introduced in the summer of 2010, never saw its second birthday. But the company best known for its PCs is today attempting to reinvent itself as a much broader player in IT services – and that means attacking all manner of tech sectors, from cloud computing to network security to, once again, mobile devices.
"I don't have a concern about catching up [in the smartphone and tablet markets]" said Dell Inc. Chief Commercial Officer Steve Felice, who was in Toronto last week to meet clients and talk up the computer maker's new strategy. "People forget we were five years late to the laptop market."
Dell reports its first-quarter earnings on Tuesday. Analysts' expectations are decidedly poor. The Street believes Dell will post a net income drop of more than 14 per cent, compared to the same quarter last year. The company's shares have been slumping since late February, and are down about 10 per cent since this time last year.
Dell has long been known for its PC business. However, growth in PC sales has been anemic compared to other parts of the tech sector. Research firm Gartner expects global PC sales to expand about 4.4 per cent this year. In contrast, worldwide smartphone sales are expected to grow close to 40 per cent.
Dell has been diversifying to find new sources of revenue. This month, the company completed its acquisition of Sonicwall, a firm that specializes in backup and network security products. In addition, Dell has been hard at work trying to sell cloud-based offerings to businesses. Rather than sell the same products as major cloud providers such as Amazon, Dell has tried to leverage its server business to build infrastructure for customers looking to run private corporate "clouds" of linked computers.
As a result of Dell's transition to broad IT products, Mr. Felice says more than half the company's revenue now comes from areas other than PC sales.
Later this year, the company will continue its expansion with another round of mobile products. But while the unsuccessful Dell Streak models of two years ago ran on Google's Android operating system, these new devices will likely use Microsoft's upcoming Windows 8.
Betting on the new operating system is a risky bet, but the latest version of the world's most popular operating system is going to have a direct impact on Dell's bottom line for myriad reasons. Not only is Dell building its mobile products around the new operating system, but the general success or failure of Windows 8 will also have a direct impact on global PC sales in coming years.
"Windows 8 is pretty pivotal," said Mr. Felice.