52 thoughts on “Dell & HP together on a long road to nowhere”

  1. Good analysis. I would add thought that Dell’s legendarily bad customer service has further alienated the consumer segment and shortened the runway for a turnaround.

    1. @Liz, I believe that Dell has made some progress with customer service, but like Om says the product portfolio is the greater weakness today. Like Om, I’ve purchased many Dell products over the years, but I currently use a Samsung Chromebook and Nexus 7 tablet as my preferred device for routine work — much of which is hosted in the cloud.

  2. Dell just bought Quest, a Microsoft Partner, that provides services to large firms. This would mimic the IBM route of years ago. I think the acquisition makes sense, because firms like Quest own the relationship that moves Dell hardware and Microsoft software into large corporate customers.

    But it completely ignores the consumer market. Might Dell be in a situation where it helps corporate customers set up Apple hardware products?

    1. Sure, HP bought EDS a few years ago for $13 billion to ape IBM. Look what happened now, HP just wrote off ~$8 billion, Sigh!

      Both Dell and HP have lost their ways and will soon be replaced by Acer, Asus, Lenovo, and Samsung in the PC, tablets, mobile devices, and consumer electronics businesses.

      1. Thanks for that nuggest MR. I do think that doing these patchwork upgrades are a bad idea, especially when a company doesn’t have a clear mission and clarity on what their business really is.

      2. I would agree with you on … that everyone is trying to diversify. But HP could get out of the PC business if they truly wanted to. With all the management shuffling at HP, doesn’t seem to be clearly defined. Hurd, Apotheker, Whitman all seem to have/had very different goals for what they see as the future of HP. I think HP has all the parts to make a meaningful turn around but really needs to get its management and board together.

  3. Nice article. PostPC era is real but ignored by both HP and Dell. The wintel ecosystem that created these vendors is disolving before our eyes. Yet the leaders as well as the rank/file hasn’t waken up to the obvious — mobility and cloud are disrupting the status quo faster then their “systems” and people can handle. Time to lead and act bold — or perish.

  4. A couple of weeks ago I might have disagreed with you Om. I thought Dell had a solid plan to transform into a services business and leverage it’s PC business for both revenue and as a value add component to enterprise customers.

    But their latest results and the PC I just received from them has me re-thinking. I’ve faithfully brought Dell computers for the past 7 years. I was thoroughly satisfied with my last desktop. The build quality was outstanding.

    Three days ago I received my latest consumer desktop from them. I brought their premier consumer XPS desktop. The difference in build quality is stark. The case is flimsy and thas a thumb screw to open a case. A thumb screw!

    If Dell is going to be an enterprise company then get out of the consumer market. As someone who has influence over my organizations and customer buying decisions, what I buy as a consumer feeds into my recommendations in the enterprise. Likewise, if HP is going to be a cloud and services company why are they selling consumer machines? Make a decision and stay focused.

  5. Keith:

    Thanks for being a loyal customer up to this point. I hope we can give you reasons to stay on that path.

    Sorry to see the XPS desktop has been a disappointment. I have an older version of the one you bought I bet. On the desktop side, many customers want easy access, that’s why it has a thumbscrew. We don’t offer XPS desktops as a business machine. We do definitely offer XPS laptops as corporate machines. From my use of them, both the XPS 13 and 14 are would be great business machines.

    Definitely understand and agree with your point that what you buy as a consumer feeds into your decisions on the corporate buying side. We’ve realized it here at Dell for a while, but still have work to do on that front.

    If there is something I can help with on the desktop side, let me know. You can reach out to me on Twitter as @LionelatDell. Otherwise, I can share my contact info with Om and ask him to give it to you.


    1. Thanks for replying Lionel. I have to agree with you on the laptop front. Over the last year I’ve brought 2 XPS 15’s and a XPS 14z. I’m happy with both those laptops for consumer machines. My previous machine was a XPS 420. Rock solid with a tool free case. There’s a big noticeable difference in the XPS 420 and the XPS 8500. I literally almost sent it back before I finished unboxing it. I don’t know if there’s anything you can do. The fit and finish just doesn’t meet my expectation for your premier consumer brand.

    2. “On the desktop side, many customers want easy access, that’s why it has a thumbscrew”

      Seriously? May I suggest purchasing a Mac Pro to see how a case can be given easy access to its components without the aide of thumbscrews? Or if the newly impoverished Dell can’t afford one, go to eBay and get a PowerMac G4 or heck, even a blue & white PowerMac G3 (those 1999 machines must be really cheap by now) and see the elegant pull a lever and the case pops open solution.

  6. Om: As a Dell employee, which I have been for 17 years, this was a tough read. But I have a few thoughts on the subject:

    Don’t underestimate Dell’s presence and capability business side of the market. Today about 80% of our revenue comes from businesses. Corporate laptops and PCs are still a big part of that, but more of it is starting to come from enterprise solutions and services. And we’re building much more capability there. If you look at our acquisitions, they tend to be smaller ones. By comparison, HP has acquired large companies. In the end, like much in business, it will come down to execution.

    The enterprise solutions and services represent more than just a bet on the cloud. Building today’s data centers takes a lot of server, storage and networking hardware and software. On the cloud front, no disrespect to AWS, but there’s still lots of additional cloud services customers are asking for.

    Are there things I’m disappointed in? Sure. As a Dell employee, no question missing on mobile and tablet front up to this point hurts a lot. There are other things I’ll keep to myself for now.

    But as an employee who has seen lots of ups and downs (more ups than downs for sure) over the last 17 years, I still believe in where the company is heading. And I definitely think it’s way too early to relegate Dell to the trash heap.


    1. Lionel

      Two points.

      1. Thanks for taking the time and sharing your thoughts.
      2. Secondly, you are a good ambassador for your company as your comment sets a high standard for a clear comment telling your side of the story.

      That said, I have stated my opinions based on publicly available data and having watched the company for a few years less than you have worked at the company.

      I do promise you, that I will keep an eye on Dell and not forget about it.

    2. Lionel,

      If Dell would concentrate on customer service, which we like to refer to as Dell-customer-disservice, they might have a chance to differentiate themselves from the rest of the now-delegated-to-alsorans bunch of PC makers. But this should have been thought of and treated a decade or two ago. There’s no reason to buy a Dell when you can get basically the same grade of hardware with the same software from many different vendors. As ronald above stated, Dell is/has been watching the numbers too closely to see what’s really going on with their business.
      Want to help drag Dell out of the bottom of the barrel, try reading some (or all) of Seth Godin’s writing. I would really hate to see a local business like Dell-fail.

      1. Bobby: Understand those thoughts on customer service. In terms of hardware differentiation though, take a look at the XPS line of laptops if you haven’t already. While they are more expensive than an average laptop, the type of materials and the build quality is pretty solid in my experience.

        Thanks for the reminder about Seth Godin. I’ll admit, it’s been since a close friend gave me a copy of The Dip. Seth’s been busy since then… will check out other titles.

  7. Great insight as always OM … and I cant disagree based on what you know publicly. I can also see why some may be frustrated with the pace of Dell’s reinvention .. but, we have some really cool disruptive stuff we are working on behind the scenes that … it wouldnt surprise me if some of our future announcements made your front page … I mean, industry changing stuff. But even I cant predict if or how well we will execute on our strategy. Aside from our secret sauce though, I think there is a huge upside for dell in the current stack wars. RIght now there really isnt a category for one vendor that is selling all-inclusive, fully automated, holistic and self-contained cloud software … and we will see a huge race into this new market this fall. And for msft and vmware, its all about leveraging their strength in enterprise to gain dominance in IaaS through advanced hybrid cloud. This is going to be all about giving the CIO the capability of providing cloud-equivalent services for on-premise while also gaining a management toolset that allows the CIO to offer the robustness and the cost of IaaS through a centrally controlled and monitored offering. So in this sense, it makes msft and vmware more like a strategic partner with CIO’s than a vendor, helping them to take back control of the cloud in their orgs. The way I see it, Dell stands to really benefit from this trend. Strong hybrid features are the single most strategic area here for the CIO. VMware needs to own all of the important networking services in order to maximize hybrid features. The ‘software defined data center’ strategically means for VMware that all workload related features become part of the transative persona, and cannot be reliant on proprietary 3rd party hardware or software. And Cisco’s entire value add is based on controlling these features. Now Dell on the other hand doesnt have a strategy that is contingent on our propietary hardware or software, we are perfectly happy promoting hybrid features because … we have both an Azure and vCloud IaaS service. So to me, we are really more aligned with msft and vmware and it appears Cisco will be increasingly divergent. Regardless though, if msft and vmware win in hypervisor networking, they will popularize new user interfaces and processes and tools for managing networks that will extend back to the physical network. They will probably certify multiple vendors switches to support their cloud software, and if Cisco doubles down on the Nexus 100v, msft and vmware may end up endorsing other vendors over Cisco. And all of that could be a key growth segment for Dell, and it could happen quite quickly. The annuity that CIO’s have had for the past decade from virtualizing physical servers is drying out, and they need a new place to turn for savings … that will be the all-inclusive private cloud software and hybrid cloud, and they will make another annuity that will last the next several years, 1st moving apps from different VM islands into a central private cloud, and then pushing apps into hybrid cloud partners.

    1. Art

      Thanks for your insightful and detailed comment.

      On the data center and cloud makeover, I do agree – it is still early days and we are going to see a shifting landscape over next few years. It would be an interesting few years no doubt.

      I hope that what you are talking about (and not telling) us helps with Dell’s reinvention.

  8. I agree, it is hard to convince companies as large as Dell or HP to innovate products that have just worked, and been their bread and butter for so long. Regardless, their lack of innovation with consumer products is astounding. HP’s Envy line looks more like a Macbook than an HP product.

  9. HP ditches the only viable third platform at the time — Web OS. And, Dell made an enormous effort to disenfranchise any potential customers with the Streak. Tis quite sad.

    My personal experience with Dell was so bad that it is difficult to imagine a seemingly successful company even wasting their time. When I stated that whoever manages the mobile products should be fired, I was informed that they in fact were. That only leaves the management structure that allowed that to happen!

    Focus. When I think IBM, I think data services. When I think Apple, I think shiny devices and integrated consumer experiences. At least I think Office with Microsoft. But, Dell and HP? Crappy corporate bricks… HP at least has a printer division, but the lack of a message is disconcerting.

    1. Nicolas,

      Good points on the the focus. I think it is something that is every company has to strive for – from IBM to little guys like us. Thanks for stating it.

  10. Microsoft survives because of a religious-like persistence. Microsoft almost never gets things right the first time, but in areas that are core to them, they iterate and fight until they get it right.

    Throwing in the towel on mobile devices when nobody (other than Apple) was getting it right was a mistake, IMHO. As an ecosystem, Android is still a mess so there is still lots of opportunity for a combined hardware/services company to get it right. Betting on Windows tablet solutions is a long term bet. The time to be building up tablet ecosystem might is now, not tomorrow.

  11. Dell should eat his own words that was uttered many years ago: he should dismantle the company and return the money to Dell’s shareholders. haha.

  12. it’s the software — Apple was able to enter these new markets because theyre kickass at writing good software (and putting it inside of brilliant hardware). Dell? what do they know about human-computing interface design? not so much.

  13. Interesting to me that a conversation about HP missing the boat on mobile and tables mentions with nary a mention of Palm.

  14. Have you ever been to a restaurant with a 15 page menu and each dish is a can’t miss? I didn’t think so.

  15. Honestly, as a Dell employee, I wasn’t sure how to respond to this. You hit a few solid points that we missed the mark in a few areas. Yes…we also made some decisions that in retrospect, might not have been the best. But find me a company…just one, that has not done the same thing. The truth is ALL companies make mistakes. Apple did, but they recovered…as will Dell.

    The consumer market it what it is, and the fact that 80% of Dell’s business comes from the Enterprise says a lot. It says that we are about more than just making PC’s. We have solid and reliable server and storage platforms, a growing services practice, a great new acquisition with Force 10 and a host of other products that give us an end to end portfolio for any business. What can Apple sell you? You can’t run your business on MacBook’s…sooner or later you either have to buy servers, or move into the Cloud. Oh…we have that too, as well as our offerings around Big Data and the OpenStack platform.

    Do we have areas where we can improve? Sure…find me a company that doesn’t. Dell is more than a PC maker…much more.


    1. David

      Thanks for your comment and sharing your opinions in a thoughtful and constructive manner.

      1. The post is about missing the one big opportunity Dell shouldn’t have – mobile. It was in the company’s wheel wagon. So to say that we are focusing on enterprise, is changing the conversation.

      2. Dell has been trying to go enterprise for 10 years and the stock price pretty much speaks for itself as to how things are going.

      3. The data center is not an easy playground. There are more aggressive players and frankly, the classic Dell customers are opting for the likes of Amazon. The company is going to be increasingly facing more well-versed competitors in this business.

      4. Latest quarter, storage sales were down. Server sales were up, 8 percent or so, but is that enough? And how much networking gear can Force 10 sell. it is not that other companies in the space are asleep at the wheel.

      The big question is when does Dell bite the bullet and become an infrastructure provider itself – buy a Rackspace for example.

      We shall see, how Dell’s not-a-PC makeover goes.

    2. People say it’s about execution, well to some point. But it’s also about adaptability, to a bigger point. I don’t think Dell has an execution problem, in my opinion they have an adaptability problem.
      Let’s have a look at the intangibles. Going from reactive to proactive systems.
      For example Google self driving cars, is it really only about safety? Heck even I would be a better driver if I had a rested professional co- driver to take over when I start to screw up while driving. So what else is Google learning? Is experienced driving reaction time or proactive avoidance and mitigation? I think that proactive avoidance and mitigation is very helpful from running data centers to get the right info displayed in your Google Glass at the right time.
      Point is, it seems Dell is preparing to adapt to today, while some other companies are moving already to the next step. In which case Dell has to catch up again. I can only say Google is pretty fast on their feet adopting. After I showed them in some comments that they had to educate their educators, it took around four weeks to get a plan ready to execute. How is Dell listing? Well more than HP it seems.

  16. Its unfortunate that hardware ubiquity has beat up both Dell and HP. I hate to say it but if they are relying on Windows to save them they are far worse shape than you outline here Om!

    Win 8 is not going to bridge the device fragmentation gap like they pray it does and partners like Dell and HP are going to have to move forward without Microsoft. If that’s possible.

    Though the tablet is getting some traction, the economic condition of the middle class is going to kill sales of new systems because there is no compelling reason to upgrade.

    Unlike the Vista to 7 transition there wont be a after 8 and like myself many wont be willing to invest in another OS period. Device ubiquity has peaked!

  17. Hi Om,

    I have been ruminating on this post about, and have a few thoughts to pass along.

    One, the story of Dell and HP are as much about the shift to integrated, differentiated systems lead by software, as they are about specifically missing the boat on mobile and tablets.

    Two, when one thinks about the paradox of the disrupted, it’s analogous to the story about how A’s hire A’s, B’s hire C’s and C’s hire D’s. In this case, folks whose backgrounds are in hardware and logistics are unlikely to hire people smarter than them, or even know what they don’t know about what makes a superior hire in hardware-software systems. Hence, the Motorola and Nokia hire examples.

    Three, look at how the business is structured. If it’s set up into a bunch of silo’d business units, the path to building differentiated, integrated systems is muddy, at best.

    Four, relative to M&A, most companies tout this story, as it’s the easy and lazy ‘Hail Mary,’ but the harder question is how many of the “core keepers” from the acquired (usually, the 2-3 best & brightest) hang around post earnout, want to be around post-earnout?

    Five, there is the undeniable truth of the ‘selfish gene’ at work; namely, that the majority of bodies in the company, including those there the longest, have a vested interest in not disrupting THEIR personal livelihood, especially knowing that there may no be a lateral move for them personally. You know the axiom about never underestimating the power of individuals to convince themselves of anything when their livelihood depends upon it, right?

    Six, is there a holistic narrative, and who is driving it? Disruption is hard, humbling and disorientating. In either of these companies is there a holistic narrative that one can point to as a rallying cry of “our unfair advantage” or attack this undefended hill? Usually, it’s more meta about big segments and no clear winners.

    Again, this is not a specific dig against HP or Dell, but more of an underscore of the paradox of the disrupted.

    Agree? Disagree?


  18. Om, Think the bigger picture and why Dell and HP will effectively give up on PC’s and Tablets is a simple profit story. Apple with super-profits in mobile can afford to fund and protect (BUY) a huge share in the tablet market. None of their competitors can match the $499 iPad price for value and I’m certain you will see a iPad mini at $249 which will likely come with a $50 app voucher if they have the volumes…. If competitors sell tablets cheaper Apple will cut the price – they can afford to. They make twice the profit of Samsung (Android just isn’t as profitable). Apple secures mass market and dominant position in Tablets – good with kids and enterprise…. and they don’t have the purchase buying cycle that phones are often locked into. What do tablet buyers then want in a phone? Virtuous Circle….

    Given that Apple’s iPhone business is bigger than Microsoft there isn’t a lot of options left in Redmond. Nokia has failed or is failing and like the Surface tablet they will have to build their own phone. Not sure shareholders will like them selling phones and tablets at a loss. If Apple can hold this advantage for two or three more years (and apps are a lock-in factor) then it will become more difficult for new entrants.

    A key is keeping iPads cheap in Emerging Markets and working the iPhones with Enterprise deals too. The super profits on iPhones come from Europe and US etc. As long as Apple overall share of smartphones continues to grow then “economics” are on its side.

    If you are Samsung / Google – how do you fight this…. Your Galaxy IV product has be to good enough to get Apple lovers to switch and you are aggressive on price.

    That’s also becoming more difficult as most Android users are also PC users and they may now be iPad users. If you can’t get an Android phone user to buy an Android Tablet then the future of your business is questionable. It’s obvious to an Apple user how Mac, iPad, iPhone, iCloud etc all relate and that convenience has value.

    Add into this “updates”. That convenience is guaranteed by Apple for a number of years. My Mac on OSX Mountain Lion is 5.5 years old. I could be running a iPhone 3GS even on the upcoming iOS6.

  19. The most fascinating topic in enterprise tech for me right now is the degree of vertical integration many winners have: ex: Apple, AWS, VMware diving into networking big time, etc. HP and Dell were both built as fulfillment partners with very weak software IP (except monitoring for HP, which is not a platform).

    I’m spending my time reading every case study I can find on migrations to vertically integrated phases of markets.

  20. Being a commodity hardware manufacturer for Microsoft was/is simply a bad idea. You scratch out your competitors’ eyes for every time and nickel while you Platform King (Microsoft) rakes in the real dollars.

    Hmm, do we see any parallels in the mobile device market, say with the Samsungs and HTCs of the world building devices to further Google’s agenda? I see this going as badly as PC manufacturing ended up for Dell and HP.

    Vertical integration is the key. Apple, in this case, is doing it right. Google and Microsoft are giving head fakes in this direction (Surface, Nexus 7).

  21. HP did buy themselves a way out of this mess: webOS. That was a fantastic idea for them!

    They even announced that it would be the software for all of their mobile offerings going forward. And then 6 months later, bizarrely (and unfortunately), they discontinued all these devices, and went back to being just another generic PC clone maker.

    We used to describe such blunders as “snatching defeat from the jaws of victory”.

    I disagree that HP lacks the talent. That company has a long and rich history of innovators. I think they lack vision and guts, which are necessary ingredients for a consumer company. They were great at building tools for engineers. They only started to falter when they shifted to being a consumer electronics company.

    1. HP did open source WebOS and I still think it stands a good chance of succeeding, assuming Meg Twitman has any clue about how to manage and promote such a thing. Imagine the promise of an open source OS of that quality. In good hands, it could easily fulfill the promise that Android has so spectacularly failed to deliver. I know many, many people who would jump ship from Android or iOS to be a part of something like that and HP would be able to ride that without having to dump a significant amount of resources into it.

      We’ll see, but sadly, I’m not betting on HP having any clue about doing that right.

  22. I’ve said it many times before and I’ll say it again: Michael Dell is the biggest one-hit wonder the tech world has ever seen. I’m honestly not saying that to mock him or insult him. I admire the man and what he accomplished. And that one big hit he had in the 90s was a killer. However, he and his company have coasted on fumes for far too many years now and it’s pretty clear that they don’t know much of anything beyond making cheap Windows PCs–something the rest of the world has lost interest in.

  23. The tragedy here is that HP had an excellent chance to make itself into a real player in the mobile market with the Palm acquisition, but Apotheker screwed that pooch so hard that PETA is stil picketing his house.

    Everything you need to know about how Dell is run as a company can be learned by looking into the details of one of their smaller acquisitions: the buyout of MessageOne back in 2009. For better or worse, their Board is completely decorative, and M. Dell is gonna go down with his hand on the tiller.

  24. Another sign of desperation from Dell is that they are now competing with their own partners. In some cases they have even stolen clients from their partners. I know that Dell is now in to consulting doing MS, Citrix, VMWare and god knows what else. Pathetic

  25. Check Simon Sinek’s TED talk–one of the most-watched, ever, or his book. As he says, people don’t buy what you do, they buy WHY you do it. Apple sells based on why–Sinek says it’s to challenge the status quo in everything they do. Christensen would call Apple a “serial disruptor.” HP used to have that sort of passion, back in the days when no lab was complete without HP test equipment, the very best one coud get. Dell, today, just makes computers by the boatload. So what? Who really cares? Sure, they’ll get business from enterprise customers, who want that very fast service, which is as close to a “vision” as Dell gets. For consumers, though, Dell = HP =Lenovo = Acer = …

  26. I don’t fully agree on Lenovo offering computers cheaper than Dell and HP. I purchased my Lenovo Thinkpad in 2007 and it was about as much as a MacBook. However it still works perfectly and I’ve only changed a hard drive and put in more RAM. Since that time, I have known people who have gone through multiple Dells, HPs, and Asus. At some point Dell and HP just started making crappy computers and having awful customer service.

  27. The entire PC division of HP brings in only 15% of their profits. As a shareholder of HPQ I could care less about PCs, especially consumer PCs which have horrible margins.

    The vast majority of HP’s profits come from enterprise customers. The ipad is not HP’s problem, it is Microsoft’s problem. HP’s main business is in the data center (hardware, software, and services), not consumer and/or byod client devices like the ipad.

    Frankly I wish Apotheker had been successful with the PC spin off. Nobody would buy it, but it could have been spun off to shareholders. I know I would have dumped my shares in it asap.

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