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Dell $24bn deal buys firm time to retreat and regrow in PC market battle

05 Feb 2013
Michael Dell sitting

But if Dell really has gleaned some wisdom from military history, he must also be aware that there's a fine line between a carefully marshalled retreat that allows an army to fight again afresh and one that leads to a permanent withering of power.

Key to determining which road Dell - the company - takes will be its partnership with Microsoft. It has provided a $2bn loan to smooth the path for the deal.

"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," it said in a statement on the loan.

Part of the reason the PC industry is in such a state has been that Microsoft was so slow at responding to the threat from Apple and Google.

The recently-released Windows 8 has yet to convince market watchers that it has done enough to stem the decline of the PC - indeed some PC makers have floated the notion that future growth in PCs will come from Google's Chromebook designs, not Microsoft's Windows ones.

In accepting the $2bn loan, Dell's fate has become inextricably linked with Microsoft's - much in the same way that Nokia has on the phone front.

On the one hand, this triumvirate may have the last laugh. Microsoft, though undoubtedly wounded by the shift to mobile computing, is a big old beast and a fierce competitor.

Dell also looks like it has some time to affect a fightback. Whether it can ever become top dog again, is now, more than ever, dependent on Microsoft getting its own strategy right.

However, as keen military historians will note, the great generals did their best not to rely on allies winning their battles for them. Dell will be hoping otherwise.

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