The wheels have been in motion for a while, but yesterday Dell went private. It took some cash from Michael Dell himself and a number of loans, including $2 billion (£1.3 billion) from Microsoft, but going forward, Dell won't have to meet the expectations of Wall Street anymore.
What does this mean for the firm’s growth? Presumably, this should allow the company to restructure and focus on long-term goals without the constant pressure to meet quarterly numbers. But how Dell plans to do that is the question. If there's a radical new plan, Dell is keeping it private. There are hints that Dell has some major innovations planned. At any rate, Dell will soon be a very different outfit from the PC company we know today.
Michael Dell is still in charge
Michael Dell will always be the founder and namesake of the company, but this move cements his role as chairman and CEO. There were plenty of investors who called for his removal when the company was public and in going private, Dell has cut down the number of people he has to keep happy now. Furthermore, he is reinvesting his own money and that of his venture firm, MSD Capitol.
Dell will be a Windows-only shop
Dell has always been a Windows-centric shop for its PCs, and Microsoft's massive loan guarantees that will continue. According to Microsoft's press release: “We're in an industry that is constantly evolving. As always, we will continue to look for opportunities to support partners who are committed to innovating and driving business for their devices and services built on the Microsoft platform.”
Microsoft made a similar investment in Nokia a few years ago, and it came with similar conditions. Acer, Samsung, and now HP are all experimenting with Chromebooks. However, I don't think that option is open to Dell anymore. Android phones are also out, as Dell would have to ramp this up from nothing. The question is: How does focusing on Windows help Dell grow? After all, the most impressive Windows devices we have seen in the last year – the Surface RT and the Surface Pro – were built by Microsoft.
There will be layoffs, but not a complete sell off
Private equity firms have a reputation for chopping up firms and selling them off for parts. That isn't going to happen here. A few divisions may get shut down or sold, but Dell will stay largely intact. If the company was going to get chopped up, it wouldn't need Michael Dell to stick around and watch. There will, I suspect, be layoffs. A lot of layoffs. The kind that would make investors at a public company flinch.
HP will take advantage
This is the first good news for HP in months. Indeed, straight off the bat yesterday, HP issued a press release that said: "Dell has a very tough road ahead. The company faces an extended period of uncertainty and transition that will not be good for its customers. And with a significant debt load, Dell's ability to invest in new products and services will be extremely limited. Leveraged buyouts tend to leave existing customers and innovation at the curb. We believe Dell's customers will now be eager to explore alternatives, and HP plans to take full advantage of that opportunity."
Hey, HP, why not just print your sales phone number and say: “Dell customers – call me!”
Dell will innovate – or at least try to
Quick, name the last Dell product you were excited about.
In my case, I would have to go back to the Dell Adamo, a beautiful ultraportable notebook that presaged the rise of Ultrabooks. Unfortunately, when we got the device in for testing, we found that it was expensive, had so-so battery life, and was underpowered for the price. But the real problem is that it was 2009! That was the last time I saw a Dell product and thought "wow, that is cool." I'm not saying Dell makes bad products; I'm saying Dell makes dull products. This needs to change.
For starters it needs to release a sexy, affordable tablet. If it must run Windows 8, so be it, but Dell can't be in the PC business without a viable tablet offering. Note: These tablets can be gateways for the kind of cloud and data services that Dell really wants to be selling.
Dell is looking to the cloud, big time
The most intriguing potential products coming out of Dell aren't even Dell inventions. Last year, the company bought a firm called Wyse that focuses on thin clients. Wyse has a project call Ophelia, which is basically a USB stick that functions like an entire self-contained PC. Just plug it into a monitor, connect your keyboard via Bluetooth, and you have a completely manageable workstation. It also takes Dell from being a builder of beige boxes to a seller of subscriptions to the cloud processing, storage, and security that makes a solution like Ophelia work for businesses.
Done right, private backing could actually make Dell more agile and flexible, but we have yet to hear the ideas that will change the direction of the company. Dell has cut its Wall Street strings, but there are new strings held by Silver Lake, its debt holders, and Microsoft. Presumably, they have all signed up to Dell's strategic vision, but right now, they are keeping that vision private.
One thing is for certain – it won't revolve around the PCs that made Dell what it is today.